Oversight Hearing of the U.S. Securities and Exchange Commission

House Subcommittee on Financial Services and General Government

2025-05-20

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Source: Congress.gov

Summary

This meeting of the House Appropriations Committee Subcommittee on Financial Services and General Government welcomed Chairman Paul Atkins of the Securities and Exchange Commission to discuss the SEC's mission, budget priorities, and vision for regulatory frameworks, particularly concerning digital assets. Members raised questions about regulatory burdens, staff reductions, investor protection, and market integrity concerns.

Themes

SEC's Mission and Regulatory Approach

The Securities and Exchange Commission's mission, established in 1934, focuses on protecting investors, maintaining fair and efficient markets, and facilitating capital formation, a mission Chairman Atkins intends to prioritize anew.[ 00:02:56-00:02:59 ] Concerns were raised about past sweeping regulations implemented without sufficient public feedback or cost-benefit analysis, leading to American companies being less competitive.[ 00:03:16-00:03:27 ] Chairman Atkins stated that policymaking will now primarily occur through notice and comment rulemaking rather than "regulation by enforcement," emphasizing the need for smart, effective, and tailored regulations that balance costs and benefits. Ranking Member Hoyer, however, expressed concern about a reduction in enforcement and staff, fearing it could weaken the SEC's ability to protect investors and ensure market integrity. Chairman Atkins clarified that staff reductions were due to voluntary retirements and buyouts, which he views as an opportunity for internal growth and reorganization.

Digital Assets and Crypto Regulation

A significant discussion point was the regulatory framework for digital assets, which advancements in blockchain technology present as an "incredible opportunity" for American businesses and economy.[ 00:03:36 ] Chairman Atkins' key priority is to develop a rational regulatory framework for crypto asset markets that establishes clear rules to foster innovation and protect investors. He noted that current market uncertainty inhibits innovation, as legal professionals struggle to determine what constitutes a security in the crypto space. The newly created crypto task force at the SEC is working to provide this clarity through potential rulemaking and roundtables, and Chairman Atkins intends to collaborate with the CFTC to cover all aspects of the digital asset market.[ 00:03:57-00:04:05 ] He also clarified that, according to staff guidance, "meme coins" are currently classified as collectibles rather than securities.[ 00:32:25-00:32:31 ]

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[ 00:38:58 ]

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[ 00:39:56-00:40:01 ]

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 Concerns were raised by Mr. Pocan and Mr. Ivey regarding potential market manipulation and insider trading linked to political figures' statements and crypto investments, to which Chairman Atkins responded that he cannot comment on ongoing or potential investigations. There are no current plans to create a new, dedicated division for digital assets, as innovation should be integrated throughout the agency.

Regulatory Burden and Rollbacks

Chairman Joyce inquired about rescinding rules proposed by former Chair Gensler to ease regulatory burdens.[ 00:12:36-00:12:52 ]

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 Chairman Atkins indicated that he is reviewing past regulations and emphasized ensuring comment periods are not "artificially short." Congresswoman Hinson praised the SEC's decision to stop defending the controversial climate disclosure rule, which she considered an overreach of the Commission's jurisdiction.[ 00:59:11-00:59:26 ]

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 Chairman Atkins confirmed that the climate rule is "on ice" due to consolidated lawsuits and is under active review for its future. He also expressed openness to creating a public "suggestion box" or portal for stakeholders to flag burdensome or unnecessary regulations for review.

Investor Protection and Market Integrity

Congressman Bishop highlighted the decline in investor protection clinics and the need to address senior fraud, an area Chairman Atkins plans to rejuvenate with investor education initiatives.[ 00:34:34-00:35:19 ]

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 Chairman Atkins affirmed the importance of clear rules to prevent fraud across all markets. On the issue of corporate penalties, Chairman Atkins articulated a philosophy that penalties should target individuals for misdeeds, particularly when shareholders are harmed, rather than penalizing corporations in ways that inadvertently hurt the very shareholders they aim to protect. Congresswoman Hinson raised significant concerns about the SEC's data security, citing past breaches and the vulnerabilities of the Consolidated Audit Trail (CAT) to cyber threats and misuse of sensitive investor information.[ 01:19:55-01:20:16 ]

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 Chairman Atkins acknowledged these concerns and pledged to prioritize efforts to shore up the agency's IT systems, conduct a thorough "scrubbing" for vulnerabilities, and review CAT's benefits, costs, and security risks.[ 01:20:51-01:21:31 ]

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Tone of the Meeting

The meeting maintained a professional and largely respectful tone, though it included several pointed questions from members of Congress.[ 00:07:22-00:07:28 ]

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[ 00:12:36-00:12:52 ]

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 Chairman Atkins, despite having only been in his role for 20 days, responded diplomatically, often citing his recent arrival while also conveying his vision and commitment to the agency's mission.[ 00:12:59 ]

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 There was an underlying tension, particularly in discussions about alleged political interference in SEC staffing decisions and potential insider trading linked to political figures.[ 00:20:01-00:20:37 ]

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 Members expressed clear concerns about specific policies and the SEC's effectiveness, prompting Chairman Atkins to outline his priorities for increased transparency, efficiency, and a renewed focus on core responsibilities.

Participants

Transcript

I'd like to thank Chairman Atkins for being here today and for his leadership at the SEC.  Established in 1934, the Securities and Exchange Commission is a primary federal regulatory agency responsible for enforcing U.S.  security laws.  The commission has a three-part mission.  Protect investors.   maintaining fair, orderly, and efficient markets and facilitating capital formation.  The SEC has played a critical role in helping American capital markets become the most robust and attractive of any in the entire world.   If our capital markets are to remain the envy of the world, we need to encourage capital formation and ease regulatory burdens that make it too difficult for businesses to grow.  Too often, past leadership at the SEC has implemented sweeping regulations without considering public feedback or carefully weighing the costs and benefits.  I'm glad to see the Commission has already taken steps to roll back some of these regulations that would have made American companies less competitive in an ever-changing global economy.   In addition, advancements in blockchain technologies and digital assets also present an incredible opportunity for American entrepreneurs, businesses, and our economy.  If we don't take the lead in making the United States a hub for digital asset innovation, our global competitors will.  Markets thrive the most when they can rely on regulatory fairness and certainty.  Regulation by enforcement is not just unfair, it is counterproductive.  It also ignores Congress and the legal limits it places on regulatory bodies.   As lawmakers continue bipartisan conversations around the market structure, frameworks, and digital assets more broadly, the SEC and other regulators should work to provide as much clarity to market participants as soon as possible.   To that end, the newly created crypto task force at the SEC has provided a forum for regulators, innovators, and market participants to collaborate and provide recommendations on the regulatory framework for the digital asset ecosystem.  I'm looking forward to hearing more about the task force progress so far and how we appropriators can support their continued work.
Chairman Atkins, thank you for your willingness to serve.  Your decades of experience both at the SEC and the private sector make you the right person to lead the SEC at this important time.  I look forward to hearing from you about your vision for the SEC and the Commission's budget priorities as we look forward to FY 2026.  I now recognize the ranking member, Mr. Hoyer, for his opening statement.
Thank you very much, Mr. Chairman, and welcome.   Mr. Atkins, Commissioner Atkins to the hearing, and thank you very much for taking the time to stop by my office.  Subsequent to our conversation, I talked to Gary Gensler, whom you know and who had high remarks for you.  That did not mean, obviously, as you well know, that he agreed with your proposition any more than you agreed with his propositions, but he believes that   I asked him, what do you thought?  His father was a good friend of mine.  He's from Maryland.  I've known him for a long period of time.  So I thank you for being here, and I thank you for, as the chairman did, for agreeing to pursue, even though we may disagree, the fact that you're highly perceived by your colleagues is, I think, important.  Today's hearing on the Securities Exchange Commission comes amid circumstances somewhat reminiscent of the time of the agency's founding.   Though not as dire as the Great Depression, there's a significant volatility and lack of confidence in our markets right now.  The Trump administration's tariffs shocked the stock market and rattled U.S.  bonds.  The value of the dollar is down around the world.  Could be good or get bad in some instances.  The past quarter, our economy shrank for the first time since the COVID-19 crisis.  In April, consumer sentiment slid to its second lowest reading on record.   with Americans rightfully fearing what rising costs from tariffs will mean for their finances and their families.  Trump's trade agenda, paired with Republicans' efforts to explode the national debt by passing massive tax cuts for the wealthiest among us, led America to lose its last perfect credit rating just last weekend.  There are also growing concerns of market manipulation and insider trading related to Trump's tariff pause announcement.
when he said it was a good time to buy.  It turned out to be a good time to buy, as he announced just hours later he was going to change his trade policy.  Today's circumstances may be similar as the SEC's funding, but I fear the agency's response may not be.  The SEC ought to address the current mistrust and fraud in our markets by better protecting investors and improving enforcement.  I had the opportunity to read your testimony.   and I thought it was comprehensive and good.  On page three, you said policymaking will be done through notice and comment rulemaking, not through regulation by enforcement.  I think I understand what you mean by that, but I also am concerned as to the reduction that we have seen in enforcement monies.

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