In remarks to the Investor Advisory Committee, U.S. Securities & Exchange Commission (SEC) Chairman Paul S. Atkins set out priorities to modernize SEC rules to accommodate tokenization and on-chain market activity, including by using the agency’s exemptive authorities to provide compliant pathways while longer-term rules are developed. He also argued that the SEC’s existing principles-based disclosure framework is sufficient to inform investors about material impacts and risks related to artificial intelligence, and cautioned against prescriptive AI-specific disclosure checklists. Atkins framed tokenization as affecting not only trading but also elements of the issuer-investor relationship such as proxy voting, dividend payments and shareholder communications, potentially reducing reliance on multiple intermediaries. He highlighted three tokenization approaches he expects the SEC to consider: equity issued directly on public distributed ledgers as programmable assets, on-chain security entitlements representing off-chain equities, and tokenized products offering synthetic exposures to public equity performance. He criticized a prior effort to redefine “exchange” to capture “communication protocols” as overly expansive and innovation-chilling, and called for a time-limited, transparent exemptive framework anchored in investor protections that can distinguish decentralized finance from a spectrum of more centralized on-chain finance and reduce opportunities for regulatory arbitrage. As next steps, Atkins said he has asked SEC staff to recommend how the Commission could deploy its exemptive authorities to support on-chain innovation while work continues on “durable” rules of the road, and indicated he plans to engage on these issues over the coming months.

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