Yesterday, Paul Atkins was sworn in as the 34th Chairman of the Securities and Exchange Commission. For those of us who've navigated the regulatory uncertainty of the past four years, this moment represents more than a personnel change—it's a fundamental shift in how the US approaches digital asset oversight.
The End of an Era
Gary Gensler's tenure will be remembered for one thing above all: regulation by enforcement. Rather than providing clear rules for the crypto industry to follow, the SEC pursued an aggressive litigation strategy that left market participants guessing which activities might trigger enforcement action.
The results were predictable. Innovation migrated offshore. US investors lost access to products available in other jurisdictions. And market makers like ourselves spent more time with lawyers than building infrastructure.
Gensler's resignation in January signalled the change was coming. Atkins' confirmation makes it official.
Who Is Paul Atkins?
Atkins is no stranger to the SEC—he served as Commissioner from 2002 to 2008. More importantly for our industry, he's been a consistent advocate for regulatory clarity over regulatory ambiguity. His consulting firm, Patomak Global Partners, has advised numerous crypto companies on compliance, giving him direct insight into the challenges the industry faces.
Early signals suggest his priorities will include:
- Clear token classification frameworks: Finally answering the "is it a security?" question that has plagued the industry.
- Workable custody rules: Enabling traditional financial institutions to hold digital assets without regulatory risk.
- Reasonable registration pathways: Creating viable compliance routes for crypto exchanges and trading platforms.
What This Means for Liquidity
Regulatory uncertainty is the enemy of liquidity. When market participants can't assess their legal exposure, they reduce position sizes, widen spreads, and limit counterparty relationships. We've seen this firsthand over the past several years.
A clear regulatory framework changes the calculus entirely:
- Institutional re-entry: Major allocators who've been waiting on the sidelines can finally deploy capital with compliance confidence.
- Banking relationships: With regulatory clarity, banks can serve crypto firms without existential risk to their charters.
- Market structure improvements: Clear rules enable the development of more sophisticated trading infrastructure—better matching engines, more efficient settlement, deeper order books.
The Road Ahead
We're not naive about the timeline. Regulatory change moves slowly, even with favourable leadership. The SEC staff who executed Gensler's enforcement agenda are still in place. Rulemaking requires notice and comment periods. Court precedents from the enforcement era will take time to unwind.
But direction matters more than speed. The market can handle a long journey toward clarity; what it couldn't handle was the uncertainty of the destination. That uncertainty is now resolved.
For LQD Markets, the Atkins appointment is a green light to accelerate our US infrastructure investment. The regulatory environment that drove liquidity offshore is ending. The firms positioned to serve institutional demand in a compliant framework will define the next era of crypto trading.
The reset has begun. The question now is how quickly the market can adapt to an environment where the rules are finally clear.