On Wednesday, Dec. 4, President-elect Donald Trump announced his intention to nominate Paul Atkins as the next chair of the Securities and Exchange Commission (SEC). Atkins, who served as an SEC commissioner from 2002 to 2008 during the George W. Bush administration, is known for preferring a lighter-touch approach to regulation and advocating for market efficiency. He currently serves as CEO of Patomak Global Partners, a consultancy specializing in financial regulation, and has been active in cryptocurrency advocacy through his work with clients and organizations, including the Chamber of Digital Commerce.
Atkins’ previous tenure at the SEC emphasized reducing regulatory burdens and fostering capital market innovation. During his time as a commissioner, he played a critical role in advancing a number of reform efforts, such as modifying compliance requirements for smaller companies under the then-newly implemented Sarbanes-Oxley Act. He also supported initiatives to enhance capital formation, particularly for private equity and small businesses.
This announcement by the president-elect has been met with applause by many stakeholders within the digital assets ecosystem. While virtually every candidate Donald Trump was rumored to be considering for the position would have sought wholesale change in the commission’s approach to cryptocurrency regulation and enforcement, Atkins is perhaps the most favorable selection for cryptocurrency advocates. His personal familiarity with the unique and complex policy challenges faced by the industry will enable the Commission to move swiftly to provide regulatory relief for the market being sought by the cryptocurrency industry. Atkins has also previously expressed skepticism regarding the effectiveness of aggressive enforcement against firms, a practice that has been a hallmark of cryptocurrency market regulation by the SEC under Chair Gary Gensler.
Approach to Policy
Atkins’ regulatory philosophy generally reflects a preference for a principles-based approach, emphasizing broad guidelines that allow companies flexibility to innovate while avoiding overly prescriptive compliance boundaries. During a panel discussion hosted by the American Enterprise Institute in December 2022, Atkins shared this perspective while providing his views on the SEC’s then recently proposed climate-related disclosure rule. Specifically, he raised concerns that the proposed rule represented a significant departure from the Commission’s longstanding materiality standard, recommending the SEC withdraw the proposed rule and if determined to create climate-related disclosures instead take a principles-based approach.
During these remarks, Atkins also notably mentioned that one of his primary concerns with the SEC pursuing this rule was that a likely successful court challenge would “inevitably constrain the Commission and curtail its authority.” Although the SEC adopted a final climate disclosure rule on March 6, 2024, just under a month later the Commission moved to freeze implementation of the rule in the face of multiple lawsuits. Given Atkins’ comments in 2022, it could be expected that, as chair he would seek to avoid a ruling that would be damaging to the Commission’s broader authority, perhaps by moving quickly to amend or even entirely withdraw the rule.
An additional area of regulatory focus at the SEC where Atkins is likely to change course, is a set of pending rules related to equity market structure. Since early 2021, which saw a period of extreme equity market volatility in shares of companies like GameStop and other “meme stocks,” the SEC has increased its focus on making reforms to the collection of SEC regulations that define the structure and dynamics of U.S. equity markets. In 2022, the Commission issued four separate proposed rules aimed at making improvements to stock market operations with the aim of increasing fairness, transparency and market efficiency. The two least controversial of the four rules, new disclosure requirements for broker-dealers and changes to limits on minimum increments for quoting share prices, were finalized and adopted by the Commission earlier this year. However, the other two, new standards for broker-dealers’ handling of customer trades and rules for increasing price competition for retail investor trades, remain unfinished.
To date, most observers have expected that whoever the president-elect might appoint as chair would not seek to finalize and adopt these two outstanding proposed rules because of the strong opposition both have received from a range of Republican and industry stakeholders. While this is likely also true for Atkins, his past public comments suggest that as chair he may continue to prioritize reforms in this area. As a commissioner, Atkins voted against the Regulation National Market System (Reg NMS) when it was adopted by the Commission in 2005. This set of rules helped redefine how U.S. listed stocks are traded both on and off exchanges and played a major role in revolutionizing the market by facilitating the growth of electronic trading.
As recently as 2021, Atkins has publicly maintained his objections to Regulation NMS. While providing prepared remarks during a meeting of the SEC Investor Advisory Committee, Atkins stated that “many positive aspects of the market today … have occurred despite Reg NMS, not because of it” and that “Reg NMS is unnecessarily complex, invites gamesmanship, induces widespread market fragmentation, disperses liquidity and diminishes transparency.” Given these longstanding and strongly held convictions regarding the misguided nature of Reg NMS, it appears likely that equity market structure will remain high on the Commission’s rulemaking agenda.
Outlook
Ultimately this appointment signals the Trump administration's intent to prioritize pro-business policies and support emerging financial technologies. Stakeholders across securities and digital assets markets should prepare for significant changes in the SEC regulatory and enforcement landscape. President-elect Trump will also need to nominate a Democrat to replace Commissioner Jaime Lizárraga, who plans to resign on Jan. 17. By statute, no more than three of the five SEC commissioners may belong to the same political party.
