Over the past few days, the U.S. Securities and Exchange Commission (SEC) has been extremely active in the crypto sector. In particular, with the convening of events such as the sixth crypto roundtable and the fourth Investor Advisory Committee meeting, SEC Chairman Paul Atkins has delivered multiple speeches addressing the crypto space, covering areas including privacy, custody, regulation, and AI.

If one were to use a single word to summarize the SEC’s recent actions in the crypto domain, it would be neither “tightening” nor “loosening,” but reconstruction.

On the surface, the SEC is still talking about risks, custody, and investor protection. But put another way, the SEC is no longer trying to suppress the crypto industry using traditional financial templates. Instead, it has begun to consider a more realistic question: under the irreversible trend toward on-chain systems, where should regulation actually position itself?

The core of this shift does not lie in any single specific rule, but in the regulatory philosophy itself.

In recent public remarks, the SEC Chairman used a striking and rare analogy: if regulatory approaches are mishandled, blockchain technology could be distorted into “the most powerful financial surveillance system in history.”

This was not an emotional statement, but a highly consequential boundary warning. Blockchain’s transparency was originally designed to reduce trust costs, improve settlement efficiency, and reduce intermediary friction. But if regulatory logic evolves into the following:

• every wallet is treated as a potential broker

• every line of code is treated as a trading venue

• every on-chain transfer is presumed to require prior or subsequent reporting

then blockchain’s technical advantages would be completely reversed into a form of infrastructure that is “natively auditable, inescapable, and permanently traceable.”

This touches on a long-avoided question: does compliance necessarily mean total visibility?

This shift in the SEC’s stance releases at least three important signals:

First, regulators have realized that “technology neutrality” cannot remain at the level of slogans. If regulatory outcomes completely contradict the original intent of the technology, that is not neutrality, but misuse.

Second, privacy is no longer being treated as the “opposite” of regulation. The previous narrative was: the stronger the privacy, the harder the regulation. The narrative is now beginning to shift toward how regulation can function without sacrificing privacy.

Third, regulators are beginning to acknowledge that over-compliance itself is a form of systemic risk.

This is the first time in many years that the SEC has so clearly left room, in a public context, for the concept of “regulatory self-restraint.”

Note: On December 12, the U.S. SEC officially published guidance aimed at retail investors on the fundamentals of crypto asset custody, to help them decide how to hold crypto assets in the best possible way.

If discussions around privacy and surveillance are more macro-level, then the SEC’s recently released guidance on crypto asset custody is clearly a practical response directed at ordinary investors.

This content appears basic on the surface, but its significance is substantial. It does not discuss whether tokens are securities, nor does it touch on enforcement intensity. Instead, it returns to the most fundamental — and also the most failure-prone — aspect of the crypto world: how do you actually “hold” crypto assets?

In traditional finance, this question almost does not exist. When you hold stocks, custody is handled by banks, brokers, and custodians. But in the crypto world, the SEC has for the first time clearly stated, in official language, a simple fact: wallets do not store assets, they store private keys. If the private key is lost, the asset effectively ceases to exist.

Behind this statement lies a subtle shift in regulatory attitude. In the past, regulators tended to attribute risk to “market immaturity,” “project fraud,” or “technical vulnerabilities.” Now, the SEC is increasingly directing risk attribution toward institutional design itself — including whether regulatory boundaries have been overstepped, whether compliance frameworks have distorted technological forms, whether privacy has been excessively sacrificed, and whether overly centralized regulation is creating new forms of systemic risk.

Especially in its comparison between self-custody and third-party custody, the SEC did not simply side with one model. Instead, it repeatedly emphasized a practical reality:

• self-custody gives you absolute control, but also absolute responsibility

• third-party custody lowers operational complexity, but introduces credit and bankruptcy risk

This is not an endorsement of centralized platforms, but a reminder to investors that there is no “risk-free option” in the crypto world — only choices with different risk structures.

More importantly, the SEC repeatedly referenced issues such as privacy protection, data usage, rehypothecation, and commingling of assets in this guidance. In reality, this is laying the conceptual groundwork for more granular custody regulation in the future.

Regulatory logic is shifting from “punishing illegal behavior” toward “standardizing infrastructure behavior.”

What truly captured market attention was the SEC’s recent systematic statements around blockchain, tokenization, and AI. At the fourth Investor Advisory Committee meeting in 2025, SEC Chairman Paul Atkins delivered a highly anticipated speech. This address was not only his annual summary-style remarks, but also a systematic articulation of the future development path of U.S. capital markets.

If one focuses only on keywords, it would be easy to misinterpret the speech as “the SEC is embracing blockchain.” A more accurate interpretation is that the SEC is not relaxing regulation, but redefining its boundaries and methods.

In the relevant remarks, the SEC clearly conveyed one position: the issue is not “on-chain versus off-chain,” but whether market efficiency, transparency, and the quality of investor protection are improved. This directly rejects the previous blunt regulatory approach of forcing all on-chain protocols into outdated definitions of “exchanges” or “brokers.”

The SEC also, for the first time, systematically distinguished between several different tokenization pathways:

• natively issued on-chain securities

• structures that map traditional asset rights onto the blockchain

• synthetic products that only reflect price and do not involve ownership rights

This distinction itself signals that regulation is no longer attempting a one-size-fits-all approach.

Even more noteworthy is the SEC’s explicit mention of making good use of exemptions and transitional frameworks to provide experimental space for on-chain finance. Behind this lies a very pragmatic judgment: if U.S. regulation does not leave windows for innovation, innovation will not disappear — it will simply relocate.

On the topic of AI, the SEC’s attitude is equally revealing. As companies enthusiastically embrace AI, the SEC has not chosen to issue a long list of “mandatory disclosure items,” but has instead emphasized continued adherence to the principle of materiality.

This reflects a reassessment of past regulatory experience. Overly detailed disclosure checklists often lead to two outcomes: mechanical compliance by companies resulting in distorted information, and regulatory fatigue where rules rapidly become outdated due to the pace of technological change. The SEC clearly does not want to replicate this failed path in the overlapping domain of AI and crypto.

Regulators are beginning to acknowledge that the pace of technological change has already become too fast to be covered by exhaustive rules. Therefore, rather than prescribing “what you must do,” it is more effective to return to a more fundamental question: does this technology materially affect your business, risks, and financial condition?

This represents a clear “return to principles.”

When these developments are viewed together, a clear trend emerges: the SEC is actively trying to shed its role as the “opposition to innovation.” It continues to emphasize investor protection, market integrity, and compliance boundaries, but the approach is changing — from “expanding definitions and compressing space” to “clarifying boundaries and releasing flexibility.”

For the market, this does not mean that risk has disappeared, nor does it signal deregulation. But it does mean that the crypto industry is entering a stage where it can be discussed, designed, and institutionalized.

The real test lies not in what regulators say, but in whether, over the next few years, these ideas can be translated into rules that are executable, predictable, and do not excessively drain innovative energy.

Over the past few days, the U.S. Securities and Exchange Commission (SEC) has been extremely active in the crypto sector. In particular, with the convening of events such as the sixth crypto roundtable and the fourth Investor Advisory Committee meeting, SEC Chairman Paul Atkins has delivered multiple speeches addressing the crypto space, covering areas including privacy, custody, regulation, and AI.

If one were to use a single word to summarize the SEC’s recent actions in the crypto domain, it would be neither “tightening” nor “loosening,” but reconstruction.

On the surface, the SEC is still talking about risks, custody, and investor protection. But put another way, the SEC is no longer trying to suppress the crypto industry using traditional financial templates. Instead, it has begun to consider a more realistic question: under the irreversible trend toward on-chain systems, where should regulation actually position itself?

The core of this shift does not lie in any single specific rule, but in the regulatory philosophy itself.

In recent public remarks, the SEC Chairman used a striking and rare analogy: if regulatory approaches are mishandled, blockchain technology could be distorted into “the most powerful financial surveillance system in history.”

This was not an emotional statement, but a highly consequential boundary warning. Blockchain’s transparency was originally designed to reduce trust costs, improve settlement efficiency, and reduce intermediary friction. But if regulatory logic evolves into the following:

• every wallet is treated as a potential broker

• every line of code is treated as a trading venue

• every on-chain transfer is presumed to require prior or subsequent reporting

then blockchain’s technical advantages would be completely reversed into a form of infrastructure that is “natively auditable, inescapable, and permanently traceable.”

This touches on a long-avoided question: does compliance necessarily mean total visibility?

This shift in the SEC’s stance releases at least three important signals:

First, regulators have realized that “technology neutrality” cannot remain at the level of slogans. If regulatory outcomes completely contradict the original intent of the technology, that is not neutrality, but misuse.

Second, privacy is no longer being treated as the “opposite” of regulation. The previous narrative was: the stronger the privacy, the harder the regulation. The narrative is now beginning to shift toward how regulation can function without sacrificing privacy.

Third, regulators are beginning to acknowledge that over-compliance itself is a form of systemic risk.

This is the first time in many years that the SEC has so clearly left room, in a public context, for the concept of “regulatory self-restraint.”

Note: On December 12, the U.S. SEC officially published guidance aimed at retail investors on the fundamentals of crypto asset custody, to help them decide how to hold crypto assets in the best possible way.

If discussions around privacy and surveillance are more macro-level, then the SEC’s recently released guidance on crypto asset custody is clearly a practical response directed at ordinary investors.

This content appears basic on the surface, but its significance is substantial. It does not discuss whether tokens are securities, nor does it touch on enforcement intensity. Instead, it returns to the most fundamental — and also the most failure-prone — aspect of the crypto world: how do you actually “hold” crypto assets?

In traditional finance, this question almost does not exist. When you hold stocks, custody is handled by banks, brokers, and custodians. But in the crypto world, the SEC has for the first time clearly stated, in official language, a simple fact: wallets do not store assets, they store private keys. If the private key is lost, the asset effectively ceases to exist.

Behind this statement lies a subtle shift in regulatory attitude. In the past, regulators tended to attribute risk to “market immaturity,” “project fraud,” or “technical vulnerabilities.” Now, the SEC is increasingly directing risk attribution toward institutional design itself — including whether regulatory boundaries have been overstepped, whether compliance frameworks have distorted technological forms, whether privacy has been excessively sacrificed, and whether overly centralized regulation is creating new forms of systemic risk.

Especially in its comparison between self-custody and third-party custody, the SEC did not simply side with one model. Instead, it repeatedly emphasized a practical reality:

• self-custody gives you absolute control, but also absolute responsibility

• third-party custody lowers operational complexity, but introduces credit and bankruptcy risk

This is not an endorsement of centralized platforms, but a reminder to investors that there is no “risk-free option” in the crypto world — only choices with different risk structures.

More importantly, the SEC repeatedly referenced issues such as privacy protection, data usage, rehypothecation, and commingling of assets in this guidance. In reality, this is laying the conceptual groundwork for more granular custody regulation in the future.

Regulatory logic is shifting from “punishing illegal behavior” toward “standardizing infrastructure behavior.”

What truly captured market attention was the SEC’s recent systematic statements around blockchain, tokenization, and AI. At the fourth Investor Advisory Committee meeting in 2025, SEC Chairman Paul Atkins delivered a highly anticipated speech. This address was not only his annual summary-style remarks, but also a systematic articulation of the future development path of U.S. capital markets.

If one focuses only on keywords, it would be easy to misinterpret the speech as “the SEC is embracing blockchain.” A more accurate interpretation is that the SEC is not relaxing regulation, but redefining its boundaries and methods.

In the relevant remarks, the SEC clearly conveyed one position: the issue is not “on-chain versus off-chain,” but whether market efficiency, transparency, and the quality of investor protection are improved. This directly rejects the previous blunt regulatory approach of forcing all on-chain protocols into outdated definitions of “exchanges” or “brokers.”

The SEC also, for the first time, systematically distinguished between several different tokenization pathways:

• natively issued on-chain securities

• structures that map traditional asset rights onto the blockchain

• synthetic products that only reflect price and do not involve ownership rights

This distinction itself signals that regulation is no longer attempting a one-size-fits-all approach.

Even more noteworthy is the SEC’s explicit mention of making good use of exemptions and transitional frameworks to provide experimental space for on-chain finance. Behind this lies a very pragmatic judgment: if U.S. regulation does not leave windows for innovation, innovation will not disappear — it will simply relocate.

On the topic of AI, the SEC’s attitude is equally revealing. As companies enthusiastically embrace AI, the SEC has not chosen to issue a long list of “mandatory disclosure items,” but has instead emphasized continued adherence to the principle of materiality.

This reflects a reassessment of past regulatory experience. Overly detailed disclosure checklists often lead to two outcomes: mechanical compliance by companies resulting in distorted information, and regulatory fatigue where rules rapidly become outdated due to the pace of technological change. The SEC clearly does not want to replicate this failed path in the overlapping domain of AI and crypto.

Regulators are beginning to acknowledge that the pace of technological change has already become too fast to be covered by exhaustive rules. Therefore, rather than prescribing “what you must do,” it is more effective to return to a more fundamental question: does this technology materially affect your business, risks, and financial condition?

This represents a clear “return to principles.”

When these developments are viewed together, a clear trend emerges: the SEC is actively trying to shed its role as the “opposition to innovation.” It continues to emphasize investor protection, market integrity, and compliance boundaries, but the approach is changing — from “expanding definitions and compressing space” to “clarifying boundaries and releasing flexibility.”

For the market, this does not mean that risk has disappeared, nor does it signal deregulation. But it does mean that the crypto industry is entering a stage where it can be discussed, designed, and institutionalized.

The real test lies not in what regulators say, but in whether, over the next few years, these ideas can be translated into rules that are executable, predictable, and do not excessively drain innovative energy.