A Paul Atkins-led SEC will be more industry friendly, accommodating to crypto, experts say

Paul Atkins, President-elect Donald Trump’s pick to lead the Securities and Exchange Commission, will likely be more friendly to the regulated financial industry and advocate a less hostile approach to cryptocurrency firms, sources said.

Trump on Dec. 4 announced his intent to nominate Atkins as SEC chair. If confirmed, Atkins, CEO of Patomak Global Partners and a former SEC commissioner from 2002 to 2008, would replace SEC Chair Gary Gensler, who will leave the agency on Jan. 20, though his term ends in 2026.

Sources weren’t surprised by Trump’s selection, but Lance Dial, a partner at K&L Gates, noted Atkins isn’t the typical Trump nominee for his second administration.

“What’s somewhat striking about an Atkins appointment is Trump has shown a tendency to appoint outsiders into key positions,” Dial said. “Atkins is not an outsider. If anything, he’s an establishment person within the industry for a while.”

Atkins, a former attorney, is no stranger to the SEC. In addition to his stint as a commissioner during the George W. Bush administration, from 1990-1994 he served on the staff of two former SEC chairs, Richard C. Breeden and Arthur Levitt.

After serving six years a commissioner, Atkins in 2009 founded Patomak Global Partners, a financial sector consultancy firm that advises institutional investors, asset managers, broker-dealers, banks, crypto firms and financial exchanges — according to the firm's website — and in more recent years he has embraced digital assets.

Since 2017, Atkins has led industry efforts to develop best practices for digital asset issuances and trading platforms as co-chair of the Token Alliance, according to his Patomak Global Partners biography.

The Chamber of Digital Commerce describes the Token Alliance as an industry-led initiative "developed to be a key resource for tokenized networks and applications."

“His involvement in the crypto (space) certainly sends a message that this is going to be a different SEC than the anti-crypto Gensler agency,” said Jay A. Dubow, a partner who co-leads Troutman Pepper Hamilton Sanders' securities investigations and enforcement practice group.

Under Gensler, the SEC in recent years has been accused of taking a “regulation-by-enforcement” approach to crypto.

The agency targeted a host of crypto firms and exchanges, including Coinbase and Binance — the two largest crypto platforms — for allegedly operating unregistered exchanges. Last month, a group of 18 Republican state attorneys general sued the SEC over its approach to crypto, contending that the agency is overstepping its authority.

Crypto stakeholders have clamored for years for regulatory clarity. Gensler has maintained a position that there are already sufficient regulations in place under laws governing securities, commodities, money laundering and sanctions.

“It’s a non-compliant field, but the laws are there,” Gensler said at an event in October.

Atkins seems to hold a different view.

During a podcast interview last year, Atkins said if the SEC were more accommodating to crypto firms, there’d be a greater chance those firms would innovate in the United States as opposed to other countries with clearer and friendlier rules.

The SEC should “try to accommodate activity that’s not criminal and then enable markets to flourish,” Atkins said of the crypto industry.

The price of bitcoin eclipsed $100,000 for the first time shortly after Atkins’ selection was announced.

Sources are unsure exactly how Atkins will try and regulate the crypto market, but Dial said the difference between Atkins and Gensler will be stark.

“It’s certainly not going to be, ‘Let’s sue all the crypto firms and try and keep crypto out of the U.S. markets,’” Dial said.

Ji Kim, head of global policy, digital assets, and general counsel at the Crypto Council for Innovation, a crypto trade group, welcomed Trump’s announcement in a Dec. 4 post on X, formerly Twitter.

“This is a strong, forward-leaning pick, and (the Crypto Council for Innovation) looks forward to a new SEC administration focused on promoting responsible innovation, establishing clear rules and guidelines, and putting a complete end to legally flawed regulation by enforcement approach, which has severely harmed investors, consumers, and US's leadership when it comes to digital assets,” Kim said.

Consumer groups on the other hand, have voiced concerns with Atkins atop the SEC.

“Any sentient being — let alone a securities markets expert — should understand that bitcoin is ‘thin air,’ as Trump himself once put it,” said Bartlett Naylor, financial policy advocate for Public Citizen, a nonprofit consumer advocacy organization, in a statement. “That Paul Atkins has made a living promoting such a scam doesn’t bode well for his reflexes as a shepherd for investor protection.”

As SEC chair, Gensler has pursued what many industry sources describe as an aggressive agenda, adopting rules on a wide range of issues, including climate risk disclosure, Treasury market clearing, private fund disclosures, equity market efficiency and corporate governance.

Many SEC rules have faced industry lawsuits and several, like the private fund adviser rule that required increased disclosure from private funds, have been struck down.

More recently, a federal judge tossed the SEC’s rule that broadened the definition of a dealer, ruling that the agency exceeded its statutory authority.

Under Atkins, the SEC “won’t be pushing the envelope in the way Gensler tried to do,” Dubow said. “I think they will also be more responsive to comments and concerns from (the) industry before enacting final rules.”

Dial said the regulated community will be in wait-and-see mode if and when Atkins is confirmed.

“I think you’re going to see initially a plan of, ‘Let’s assess where we are, let’s see how the industry has reacted to the changes we’ve done so far, let’s see what we need to change immediately,’ and then I think we will start to see more of a proactive agenda,” Dial said.

Atkins will decide if and how he’d like to undo any Gensler-led rules.

Of note, Atkins has been an outspoken critic of the SEC’s public company climate disclosure rule, which was finalized in March. Following court challenges, the rule has been halted and the lawsuits, which have been consolidated, are now the before 8th U.S. Circuit Court of Appeals in St. Louis.

In 2022, prior to the climate disclosure rule being finalized, Atkins co-authored an op-ed in the Wall Street Journal in which he asserted the rule wouldn’t hold up in court.

“I don’t think Atkins is going to be what I’ll call an ‘anti-Gensler,’ meaning Gensler came in with a clear agenda and pushed really hard to get a lot done,” Dial said. “I don’t think we’ll see Atkins come in with a counter agenda and say, ‘I need to get my agenda done no matter what.'"

With Atkins’ experience, Dial said, it’s more likely “we’ll see a more measured approach … than Gensler. But time will tell.”