Paul Atkins’ Nomination as SEC Chair Helps to Push Bitcoin Above $100k (for now), But Why…?

Almost immediately after President-Elect Trump posted his announcement of Paul Atkins to replace Gary Gensler as the SEC Chair, the crypto sector, including Bitcoin, rallied, alongside the equity market rally led by the tech sector. Cheers from crypto sector leadership followed. Sure, Chairman Gensler has been no friend of Crypto, begrudgingly approving the trading of Bitcoin-based ETFs and more significantly engaging in rule-making through enforcement. It makes sense then that the expected exit of Chairman Gensler would be applauded, but why Paul Atkins?

SEC Chair nominee Atkins served as an SEC Commissioner with Chairmen Harvey Pitt, Bill Donaldson and Chris Cox, from 2002-2008 and since, has served as the founder and CEO of Patomak Global Partners, consulting for the securities and crypto industries on all manner of topics.

Last February, while in the private sector, SEC Chair nominee Atkins agreed to be interviewed on an outwardly Libertarian podcast. He broadly declared that while the SEC should prosecute illegal activity, like FTX, the agency should also otherwise accommodate innovation to encourage the flow of capital.  He stressed that regulators should be “attuned” to opportunities for innovation and “accommodate…reasonably…things that are out there to advance cost savings and innovation.” Specifically, “[t]he SEC should be there with its ear to the ground to figure out which way things are moving and should accommodate activity that’s not criminal and enable markets to flourish because…if it challenges incumbents…and it helps to bring down costs for investors and for people who are trying to raise capital…that’s the reason why we have financial markets and to have capital find its way…to businesses.”[1] This was hardly the regulation through prosecution which was a hallmark of the administration under Chairman Gensler.

While stressing innovation, SEC Chair nominee Atkins was certainly no fan of  FTX, SBF or their  fraud. But at its core, it was not a problem with crypto: “It happened to happen in the crypto space, but when you peel back the layers it’s the same thing that happened elsewhere, someone without proper controls without proper governance of the corporation uses other peoples’ money to do things without accountability.” Like Madoff decades before, SEC Chair nominee Atkins noted that “[SBF] was not accountable to anyone, there was no board.”  

But innovation aside, there is still the fundamental question of whether crypto qualifies as a security and appropriate for SEC regulation. While the SEC under Chairman Gensler and defense counsel fought vigorously over whether crypto did or did not meet the Howey test,[2] a case decided over 60 years before Satoshi Nakamoto first implemented the blockchain, SEC Chair nominee Atkins presented a different view:  he noted that the Howey case is “quite old, it’s arguable whether or not it’s still current…I could see the Supreme Court reexamining that for its coherence to the current environment and whether or not it needs to be tweaked.” In the meantime, while the regulatory issues are being resolved, SEC Chair nominee Atkins signaled that the cryptocurrency industry needed certainty in regulation akin to the SEC’s current safe harbor rules for securities offerings: “Safe harbors have done a good job in giving certainty to industry and of course in this particular industry [cryptocurrency] we need certainty, of course there’s a dearth of that now.”[3] 

As someone who is committed to promoting innovation and workable regulation, while prosecuting real bad actors, it is no wonder the markets and commentators have applauded the nomination of Paul Atkins so loudly.


[1] See Keep Your Government Hands Off My Crypto | Guest: Paul Atkins | Ep 215 – YouTube

[2] Sec. and Exch. Comm’n v. W.J. Howey Co., 328 U.S. 293 (1946).

[3] See The Capital ’19: Fireside Chat with Paul Atkins, Former Commissioner, U.S. SEC – YouTube

Webinar: U.S. Law Enforcement Targets Growing Global Crypto Market

Duane Morris and Khaitan & Co will present a Zoom webinar, U.S. Law Enforcement Targets Growing Global Crypto Markets: The Tiger in the Grass ‒ What Every Crypto Actor Must Know Now, on Thursday, January 18, 2024, from 4:30 p.m. to 5:30 p.m. IST. (Note: For those attendees located in the U.S., the time for this webinar is Thursday, January 18, 2024, from 6:00 a.m. to 7:00 a.m. Eastern.)

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Webinar: U.S. Law Enforcement Targets Crypto in Asia: The Tiger in the Grass ‒ What Every Crypto Actor Must Know Now

Duane Morris will present U.S. Law Enforcement Targets Crypto in Asia: The Tiger in the Grass ‒ What Every Crypto Actor Must Know Now on Thursday, November 30, 2023, from 10:00 a.m. to 11:00 a.m. Singapore.

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About the Program

Crypto entrepreneurs and their financers and advisers are facing unprecedented enforcement activity from the U.S. government, including the U.S. Securities and Exchange Commission (SEC) and the U.S. Department of Justice (DOJ). The SEC, in particular, has taken an aggressive stance in applying U.S. securities law to internationally based cryptocurrencies, and international players in the crypto market are routinely being called to defend themselves in U.S.-based investigations and U.S. courts.

In this webinar, a Duane Morris team will discuss the basis for the SEC and DOJ’s assertion of jurisdiction over international actors so that crypto players can determine whether their actions may lead to the need to comply with U.S. securities laws. The panel will also discuss the various U.S. laws that could be triggered so that foreign crypto actors become more acquainted with U.S. laws and regulations. The focus of the webinar is to educate crypto players enough so that they understand the risks.

Speakers

  • Mauro Wolfe
  • Ramiro Rodriguez

Moderator

  • Vincent Nolan

Learn more about the event and Duane Morris’ Fintech Group.

Note: For those attendees located in the U.S., the time for this webinar is Wednesday, November 29, 2023, from 10:00 p.m. to 11:00 p.m. Eastern.

Can Blockchain and NFTs Revolutionize the Fashion Industry?

Following the worldwide disruption in retail due to COVID-19, sales of luxury goods are expected to grow as much as 25% in 2022. Much of this growth has been driven by e-commerce, with online sales totalling 23% of all luxury sales in 2020. Meanwhile, consumer sustainability demands have driven growth in luxury resale or rental markets, now worth an estimated $36 billion, while brands have expanded their reach into the brave new digital territory of the metaverse – the overlapping digital spaces in which we increasingly work, play, and consume.

Yet luxury’s digital embrace has been hampered by a concomitant rise in counterfeit goods in the physical and digital worlds.  Is blockchain the solution?

To read the full text of this article co-authored by Duane Morris attorney Kelly Bonner, please visit the Multilaw website.

© 2009- Duane Morris LLP. Duane Morris is a registered service mark of Duane Morris LLP.

The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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