The U.S. financial system may transition to blockchain far sooner than many expect, according to SEC Chair Paul Atkins.
Speaking to Fox Business, Atkins said the U.S. market structure is undergoing rapid change as blockchain and electronic trading continue to mature. He noted that these advances are reshaping how participants view settlement, risk, and transparency.
Building on that point, Atkins suggested the move to blockchain could arrive within a few years rather than a decade. He emphasized that tokenization is emerging as a central feature of this shift, with digital representations of assets poised to enter mainstream finance.
Tokenization Expected to Reduce Market Friction
This growing interest in tokenized systems, Atkins explained, stems from their potential to streamline key market functions. He said, for instance, that blockchain-based settlement can improve clarity and reduce the risk of delays between trading, payment, and final settlement.
As he described, these benefits could support both institutional and retail participants. By tightening settlement windows and providing clearer audit trails, on-chain systems can contribute to a more efficient and predictable market environment.
Regulators Clarify What Counts as a Security
To address oversight concerns, Atkins reaffirmed that tokenized traditional securities fall under the same securities laws as their conventional counterparts. This continuity, he said, ensures clear investor protections as the industry evolves.
At the same time, he stressed that not all digital assets carry the same legal obligations. Collectibles, commodities, and functional tools do not meet the criteria to be considered securities.
Consequently, they fall outside the scope of the long-standing Howey Test, which governs regulated financial instruments.
New Regulatory “Innovation Exemption” Coming Soon
To support responsible development, Atkins said the SEC will introduce a new “innovation exemption” next month. This measure will allow companies to test early token models under controlled conditions.
He added that this framework is designed to bridge the gap between experimentation and regulation. By enabling short-term trials with defined limits, the SEC hopes to encourage practical innovation while maintaining investor safeguards.
SEC Attempts to Shed Anti-Innovation Reputation
The planned exemption reflects a broader internal shift. Atkins acknowledged that the SEC has often been slow to adapt to technological change. At times, it has unintentionally impeded progress.
However, he said the agency now aims to take a more supportive role to keep the United States competitive in global digital-asset development. He noted that the country has moved away from earlier restrictive positions and is now working to bring crypto activity onshore under American rules.
Privacy-Focused Tokenization Added to SEC Agenda
This evolving stance extends to privacy-preserving blockchain tools. Last week, the SEC added privacy-centric tokenization to its upcoming roundtable, which will include contributions from Zooko Wilcox, the founder of Zcash.
The session, led by Commissioner Hester Peirce, examines how zero-knowledge proofs and other privacy mechanisms can facilitate the compliance of tokenized securities. These tools are increasingly viewed as essential for broader institutional adoption.
