The United States Stock Exchange and Securities Commission has long been the most influential financial regulator in the world, helping to ensure that our capital markets are the deepest, most fair and accessible in the world. But its continuous relevance will depend on whether it can make more than respond to innovation: it must promote it proactively.
For almost a century, the SEC has adapted to evolving markets, new technologies and a greater retail participation. In its best moments, the agency has adopted innovation in the transparency service, investor protection and capital formation. But in recent years, he has moved away from that legacy, nowhere more visible than in his cryptography and blockchain approach.
Tuongvy is a speaker in consensus 2025 in Toronto from May 14 to 16.
The good news is that, with a change in leadership and a more open position, the SEC has the opportunity to correct the course. But the most important question is: how do we make that permanent change? How do we build innovation in the DNA of the SEC so that the next promising financial technology does not strangle in your crib?
I spent almost six years at the SEC, first as the main lawyer in the application division and then as the main lawyer in the Office of Legislative and Intergovernmental Affairs. Since then, I have had high -level legal and political roles in cryptographic companies throughout the ecosystem. From both perspectives, one thing is clear: the SEC can fulfill its mission more effectively, and maintain its global leadership, only if it becomes a proactive partner in financial innovation.
The sec at its best
The SEC has a proud story of adopting the change for the benefit of investors and markets equally. In the 1990s, he digitized corporate presentations through Edgar, replacing paper documents with search databases. Later it approved the ATS regulation, which allows the increase in alternative commercial systems that increased competition and liquidity. The ETFs, which were once innovative, are now conventional products that offer a low -cost diversified exhibition to a wide range of assets. More recently, fraction-compared trade has allowed millions of retail investors to have a portion of companies that once could only admire from afar.
An especially relevant example such as the SEC thinks on how to regulate cryptography is the treatment of the asset support agency. In the 1980s and 1990s, the SEC recognized that these complex financial products did not fit perfectly in existing dissemination regimes. After years of study and letters without action, he developed a personalized dissemination framework in 2004, even more refined in 2014, that innovation balanced with the protection of investors. And I didn’t need to bring hundreds of application shares to do so.
When the sec stayed behind
There are also times when the SEC could not adapt, to the detriment of investors and markets. It was slow to respond to the increase in high frequency trade, contributing to the 2010 flash block. It took years to implement the crowdfunding rules authorized by the job law. It was delayed in digital reports, delaying broader access to market data.
And, for much of recent years, his Crypto position deviated from precaution to direct hostility. Instead of issuing clear rules for digital assets, the agency made a dispersion application campaign, often against companies that sought to fulfill in good faith. Many of these actions did not even imply fraud or loss of investors. Meanwhile, American cryptographic companies fled abroad, and a global industry flourished without us.
Even reluctant approval of the Bitcoin Spot ETFs ETF in 2024 occurred only after it was forced by a federal court. And although the agency at one time spoke about the creation of a cryptographic dissemination framework similar to what it did for ABS, it never followed.
Innovation is not the enemy
Crypto can be new, but the SEC has faced this challenge before. He knows how to modernize his rules to comply with new realities. What is different now is the opportunity to take advantage of innovation, not just regulate it.
Take the blockchain technology. It could enable an almost instant commercial agreement, reduce risk and release capital. It could improve market transparency through immutable records and transaction data in real time. It could reduce operating costs by reducing intermediaries. And tokenization could expand access to private markets and classes of difficult assets, benefiting both issues and investors.
Ironically, the SEC has not seriously explored how Blockchain could improve its own market supervision. That is a lost opportunity. But it’s not too late.
A plan for the future
So how would it be possible to generate innovation in the central mission of the SEC?
- Check the SEC mandate: Congress must amend the Actual Exchange Law of 1934 to explicitly include the promotion of innovation and modernization, together with the protection of investors, market integrity and capital formation.
- Rethink the metric of success: The SEC should not measure success only by the number of actions or execution sanctions collected. It must also seek capital formation, investor confidence and the safe adoption of new technologies.
- Create an innovation office: A dedicated and trained team must commit to entrepreneurs, technologists and academics to guide responsible innovation, as well as similar offices in the United Kingdom and Singapore.
- Adopt risk -based regulation: Not all new products or platforms need complete regulatory treatment on the first day. Pilot programs, safe ports and regulatory sandboxes can help innovatives evaluate ideas while maintaining appropriate railings.
- Invest in education and training: SEC staff needs better fluidity in emerging technologies. Interdisciplinary experience must be rewarded and cultivated.
These are not radical ideas: they are proven tools extracted from the SEC’s own play book.
In a global career to define the future of finance, the SEC has an option: lead or fall behind. Its greatest strength has always been its credibility and ability to adapt.
The next generation of investors and entrepreneurs will not wait for the rules of the twentieth century to achieve innovation of the 21st century. Nor should they have to do it. If the SEC wants to continue being the gold standard, it must adapt once again, not only to the present, but to what comes next.
