SEC Chair Paul Atkins submitted testimony before the US Senate Appropriations Subcommittee on Financial Services and General Government on Tuesday prefacing his remarks by saying “the SEC is returning rulemaking to regular order.”
He said: “Our comment periods will not be artificially short, and the public will have ample time to provide feedback. The SEC will also be sure to take into consideration how rules overlap and how regulatory burdens build, in keeping with our obligation to consider their costs and benefits.”
Digital assets
Atkins said he appreciates how ambiguous or nonexistent regulations in the digital asset space creates uncertainty and inhibited innovation and can invite fraud.
“A key priority of my Chairmanship will be to develop a rational regulatory framework for crypto asset markets that establishes clear rules of the road for the issuance, custody, and trading of crypto assets while continuing to discourage bad actors from violating the law,” he said. Clear rules of the road are necessary for investor protection against fraud, he observed.
But he hastened to add that “policymaking will be done through notice and comment rulemaking, not through regulation-by-enforcement.”
When Senator Chris Coons (D-DE) asked Atkins if he would endorse allowing crypto exchanges to handle traditional securities as well as digital tokens, Atkins didn’t address the question directly. But he said the agency’s Crypto Task Force is in the process of coming up with regulations “that make sense for the industry and that allow for innovation.”
“Our task force is holding roundtables. We’ll come out with a report here in the next couple of months, and we’ll come up with proposed rules of the road,” Atkins said.
New commissioner roles
In addition to Commissioner Hester Peirce’s continued leadership of the Crypto Task Force, Atkins has asked Commissioner Mark Uyeda to be the SEC’s “ambassador” to the International Organization of Securities Commissions. Commissioner Caroline Crenshaw will take on the SEC’s administrative law proceedings framework and the procedures in adjudications used by our administrative law judges in light of Supreme Court rulings that oblige us to rethink and reform this area.
Atkins requested $2.1 billion budget for the upcoming fiscal year, saying it was in line with what the agency received in fiscal years 2024 and 2025.
Atkins noted how under Acting Chairman Uyeda, the reporting lines in the Divisions of Enforcement and Examinations were realigned to better reflect each Division’s national programs to improve efficiency, management, and oversight of the Divisions. Atkins said there would be further targeted reorganizations to come at the SEC.
To start, Atkins said he’s seeking approval from Congress to disband what is known as agency’s Strategic Hub for Innovation and Financial Technology (FinHub). He said this was because a separate office should not be needed; “innovation should be ingrained into the culture SEC-wide and not limited to a relatively small office.”
Established in 2018, FinHub was created during a critical period of emerging technologies. At the time, the rapid development of distributed ledger technology, including digital assets, artificial intelligence, and machine learning, required a centralized effort to build understanding at the SEC. Atkins believes the SEC has moved beyond this initial testing and trail phase and the agency as a whole can effectively examine and formulate rules around such technologies.
Data security
Atkins said the SEC announced last month that the agency determined that certain masked data fields on publicly available reports on Form N-PORT submitted between February 3, 2025, and May 8, 2025, were inadvertently made public on the SEC’s EDGAR system. It was the result of a software update effective February 3, and the masking error has been corrected and did not affect Form N-PORT filings made after May 8.
“This situation is not acceptable. I have directed the initiation of a comprehensive review of the EDGAR system to ensure for data integrity,” he announced.
Regional offices
The SEC has 10 regional offices across the country. In late February, the General Services Administration (GSA) informed the SEC that it would terminate leases utilized by the SEC’s Los Angeles Regional Office and the Philadelphia Regional Office.
Discussions with the GSA and the landlords are ongoing, Atkins explained, and the leases are in their “soft term” and are not terminated. Atkins said he believes the regional offices are essential to the functioning of the SEC and there should be more attention paid to other city locations and not just the Washington DC and New York offices.
Budget items
Atkins requested $2.1 billion budget for the upcoming fiscal year, saying it was in line with what the agency received in fiscal years 2024 and 2025.
Atkins referred the congressional members that Fiscal Year 2026 Congressional Budget Justification and Annual Performance Plan, Fiscal Year 2024 Annual Performance Report, issued just days ago in May, is available for review which spells out the agency’s 2026 budget request in detail. It notes the hundreds of staff departures in recent months that could leave the SEC with $100m more than it currently needs to fund its operations, he said, although some of those roles need to be filled.
According to Atkins, some of the money could be put toward hiring staff at the Public Company Accounting Oversight Board (PCAOB) should Congress mandate that the audit watchdog agency be shut down as a freestanding entity and folded into the SEC. Some Republican lawmakers have been advocating for the PCAOB’s closure, and its dissolution is included in the $3.8 trillion spending bill the House sent to the Senate last month.
Atkins told Van Hollen, in answer to the senator’s question, that the SEC would need to hire at least some of the PCAOB staff, because his agency doesn’t currently have the expertise to perform the in-depth examinations being conducted by PCAOB auditors of public company accounting firms.