With Paul Atkins now at the helm of the Securities and Exchange Commission (SEC), the community of public markets participants has emerged from the shadow of regulation by enforcement and eagerly anticipates a new chapter.
As public markets continue to undergo a seismic shift – driven by rising volatility, the acceleration of digital assets, and a new generation of investors – the SEC has an opportunity not just to keep pace, but to lead. To meet this moment, the Commission must focus on all three facets of its core mission: protect investors, ensure fair markets, fuel capital formation.
Public markets today are more dynamic than even a decade ago. With that progress comes greater opportunity and greater risk. Against this backdrop, Chairman Atkins can be a transformational leader, guiding the SEC to be a catalyst for innovation and a protector of market integrity.
In this new era, the SEC can balance two critical imperatives. First, promote growth for small and development-stage businesses, helping them raise capital, hire new talent, and remain the backbone of the American economy. Second, apply U.S. securities law anti-fraud protections to novel asset classes so that a new generation of market participants can interact with utmost transparency and confidence.
Modernizing the SEC’s POV
The SEC already has invaluable tools at its disposal to facilitate capital formation and preserve market integrity.
Even prior to Chair Atkins arrival, the Commission has begun to acknowledge that investor appetite and market behavior have evolved, and adjust its view of what constitutes a modern public market.
Operating in the modern public market means recognizing that today’s investors engage with new asset classes and demand flexible access, without sacrificing transparency and speed. An SEC that embraces these realities can use its existing power to great effect.
For example, digital asset securities have long been sidelined by regulatory ambiguity, with Congress offering several disclosure frameworks but no clear guidance. Meanwhile, the industry continues moving forward, introducing new products despite DC’s gridlock. Welcoming digital assets into the SEC “tent” can give the industry room to continue innovating while providing investors with the SECs core anti-fraud protections. The SEC already has the necessary tools at its disposal.
For example, existing SEC Rule 15c2-11 has underpinned digital asset securities disclosures in the over-the-counter market for years. There’s no need to reinvent the wheel.
The SEC’s role in governing digital asset securities should provide solace for skeptics too. The SEC’s unrivaled enforcement of anti-fraud provisions positions it to protect investors in digital assets—and public markets more broadly.
The new leadership of the SEC needn’t limit modernization efforts to digital assets.
Modernization can include other, less-glamorous but extremely impactful reforms. Allowing smaller public companies easier access to raise capital through “at-the-market” offerings would help power growth and protect existing investors from value-destroying convertible financings that plague the markets today.
Similarly, the Commission should prioritize extending margin eligibility to over-the-counter securities, which include hundreds of U.S. community banks and some of the world’s largest companies. Denying margin eligibility unnecessarily disincentivizes investors and issuers from participating in public markets.
The rise of overnight trading provides the SEC another leadership opportunity. Chair Atkins and his fellow Commissioners can help establish clear, sensible rules of the road while incentivizing markets to innovate and provide the best possible investor experience.
In short, many small businesses and growth-stage firms know that the current pathway to becoming a public company is expensive, time-consuming, and complex. Chairman Atkins can reduce those barriers and help companies access capital beyond the offerings of legacy exchanges.
Safeguard Market Integrity
As the public market evolves, the SEC’s investor protection mandate has never been more critical.
The SEC should promote the transparency efforts, led by exchanges and over-the-counter market operators, to provide clear disclosures and risk flags for novel securities and asset classes. It should also close gaps in regulatory policy, particularly around securities that qualify as penny stocks but remain listed on national exchanges. These loopholes mislead investors, increase risk, and contribute to growing sentiments of distrust in traditional financial institutions.
Investors deserve appropriate protections, including the disclosure of significant shareholders of public companies and transparency that helps identify meme stock pump-and-dump schemes.
Chairman Atkins and his team should prioritize robust investor education efforts to help individuals recognize and avoid these schemes—empowering the public with the means to protect themselves, even as enforcement works behind the scenes to hold bad actors accountable.
A Moment of Opportunity
America is a nation of innovators, and our markets, including market regulators, should reflect that spirit. The Atkins Commission can play the part of public markets’ hero—innovative, responsive, and protective.
The formula is simple: expand the tent of public markets, then rigorously protect and modernize that tent. The future of public markets—and the investors and innovators who power them—depends on it.
