SEC Seeks to Regain Crypto Ground After Missed Opportunity

The SEC is moving aggressively to regain crypto regulatory ground after Chairman Paul Atkins labeled the previous administration's approach a "big missed opportunity" for the United States. Speaking at a fireside chat at the University of Texas on Friday, February 27, Atkins took aim at former Chair Gary Gensler's enforcement-first strategy and outlined an ambitious agenda that includes modernized rules, tokenized financial products, and a fundamental rethinking of how blockchain technology fits into American capital markets.

Atkins Criticizes the Gensler Enforcement Era

The Gensler era at the SEC was defined by an enforcement-heavy posture toward digital assets, and Chairman Atkins made clear on Friday that he views it as a strategic failure. From 2021 through early 2025, the commission under Gensler argued that the vast majority of cryptocurrencies constituted unregistered securities, launching dozens of high-profile cases against firms including Coinbase, Kraken, and Binance over alleged registration violations.

Rather than establishing clear regulatory frameworks that would have allowed compliant innovation, the prior SEC leadership opted for what critics called "regulation by enforcement." This approach drove significant crypto activity offshore and left U.S. companies navigating a patchwork of legal uncertainty. Atkins told the University of Texas audience that the country paid a real price for that strategy.

"This has been a big missed opportunity for the United States that we're quickly trying to make up time for," Atkins said during the event.

This has been a big missed opportunity for the United States that we're quickly trying to make up time for.

— Paul Atkins, SEC Chairman

What Is Project Crypto and How Will It Reshape SEC Rules?

Project Crypto is the SEC's newly launched initiative to modernize its regulatory framework for digital assets, representing the most significant shift in the agency's crypto posture in years. Since the start of the Trump administration, the SEC has established a dedicated crypto task force, dropped numerous pending enforcement actions against major industry players, and begun rewriting rules that were widely viewed as hostile to innovation.

The initiative aims to replace the enforcement-first model with clear, forward-looking guidelines that give crypto companies a viable path to compliance. Project Crypto seeks to bring digital asset oversight in line with how the technology actually functions rather than forcing it into legacy securities law categories.

Atkins emphasized that while individual cryptocurrencies may rise and fall, the underlying distributed ledger technology holds transformative potential, particularly for payment clearing and settlement systems that currently operate on outdated infrastructure.

WisdomTree Wins Historic Tokenized Fund Approval

Earlier this week, the SEC granted WisdomTree exemptive relief for 24/7 trading and instant settlement of its WisdomTree Treasury Money Market Digital Fund, marking the first approval of its kind in the United States. The decision allows a fully regulated money market mutual fund to operate around the clock using blockchain-based settlement rails instead of traditional clearing systems that restrict transactions to standard business hours.

The approval is a landmark moment for tokenized real-world assets in regulated financial markets. Traditional money market funds settle on a T+1 or T+2 basis during weekday business hours, but the WisdomTree fund can now execute and settle trades 24 hours a day, seven days a week. This capability demonstrates how distributed ledger technology can eliminate settlement delays and reduce counterparty risk.

"We've approved tokenized money market mutual funds, and to come will be tokenized bank deposits," Atkins stated, signaling that the agency's appetite for blockchain-based financial infrastructure extends well beyond a single fund approval.

What Would Tokenized Bank Deposits Mean for Finance?

Tokenized bank deposits would represent a fundamental evolution of the banking system, enabling commercial bank deposits to be recorded and transferred on distributed ledgers rather than through legacy payment networks. If the SEC follows through on Atkins' signal, American banks could issue digital representations of deposits that settle instantly on blockchain infrastructure, reducing the friction and cost associated with interbank transfers and cross-border payments.

The concept goes beyond stablecoins, which are typically issued by non-bank entities and backed by reserves. Tokenized bank deposits would carry the same FDIC insurance protections as traditional deposits while gaining the speed and programmability advantages of blockchain settlement. Major financial institutions including JPMorgan and Citigroup have already experimented with deposit tokenization on private blockchain networks.

For the broader crypto industry, the SEC's embrace of tokenized financial products under Atkins represents a dramatic reversal from the Gensler era. Rather than treating blockchain technology as a threat to investor protection, the agency now appears to view it as a tool for improving market infrastructure and expanding access to regulated financial services.