The non-profit research and advocacy group Coin Center has formally submitted a policy filing to the U.S. Securities and Exchange Commission (SEC), calling for a fundamental shift in how the agency regulates cryptocurrency networks and tokenized assets. In a letter addressed to SEC Chair Paul Atkins and Commissioner Hester Peirce, Coin Center Executive Director Peter Van Valkenburgh outlined a strategic vision for regulatory clarity that prioritizes formal rulemaking over individualized relief and advocates for the recognition of blockchain technology as a replacement for traditional financial intermediaries. This submission follows recent joint remarks made by Atkins and Peirce at the ETHDenver conference, where the commissioners signaled a new era of engagement with the crypto industry characterized by prospective guidance and public participation.
A New Regulatory Paradigm Following Leadership Transition
The filing arrives during a period of significant transition for the SEC. For several years, the digital asset industry has been locked in a contentious relationship with the commission, often described by industry participants as "regulation by enforcement." Under previous leadership, the agency initiated numerous lawsuits against major exchanges and protocol developers, alleging that most digital assets constitute unregistered securities. However, the remarks from Chair Atkins and Commissioner Peirce at ETHDenver represent a pivot toward a more collaborative and transparent framework.
Coin Center’s response emphasizes that the durability of the American crypto market depends on "regulatory coherence." By moving away from litigation-heavy tactics and toward notice-and-comment rulemaking, the SEC can provide the industry with the predictable environment necessary for long-term investment. The advocacy group argues that the current "permissionless" nature of cryptocurrency is its most valuable attribute, and any new regulations must protect the rights of Americans to use these technologies freely and privately.
Prioritizing General Rulemaking Over Individualized Relief
A central pillar of Coin Center’s recommendations is the urge to move away from "no-action letters" and exemptive relief for specific companies. While no-action letters provide a temporary "green light" for a specific project to operate without fear of enforcement, they do not carry the force of law for the broader industry. Van Valkenburgh argues that this approach leads to a fragmented market where only firms with the legal resources to lobby the SEC can achieve compliance.
The filing warns against "implicit merit regulation," a scenario where regulators effectively pick winners and losers by granting relief to some projects while denying it to others. According to Coin Center, the true value of decentralized networks lies in their function as "utility-like public goods." If the SEC only grants relief to permissioned systems operated by private corporations, it inadvertently disadvantages decentralized protocols that have no central entity to petition the government.
"A truly decentralized network will not petition the Commission for exemptive relief," the filing states, noting that market participants should not be barred from superior, more secure systems simply because those systems lack an identifiable corporate sponsor. Instead, Coin Center proposes a formal "safe harbor" adopted through a public notice-and-comment process. This would allow any project meeting certain decentralized criteria to operate legally, fostering a level playing field for innovation.
Modernizing Transfer Agent Obligations Through Blockchain
The second major focus of the filing concerns the modernization of transfer agent rules. Traditionally, a transfer agent is a third-party institution—often a bank or trust company—responsible for maintaining records of stock and bond holders. Their primary role is to ensure that an issuer does not issue more shares than authorized and to track changes in ownership.
Coin Center argues that in a blockchain-based financial system, the technology itself can perform these functions more efficiently and accurately than a human intermediary. When securities are tokenized on a blockchain, the ledger serves as the "golden record" of ownership. The advocacy group suggests that the SEC should allow issuers to bear recordkeeping obligations directly, utilizing the transparency and immutability of the blockchain.
This proposal draws a parallel to how stablecoin issuers currently operate, where the smart contract and the underlying ledger manage the issuance and redemption process. By removing the mandate for a separate transfer agent, the SEC could significantly reduce the cost of issuing and trading securities, making capital markets more accessible to smaller enterprises.
Privacy-Preserving Technologies and Regulatory Oversight
Addressing concerns regarding transparency and compliance, Coin Center’s filing highlights the emergence of privacy-preserving blockchains. While early blockchains like Bitcoin are entirely transparent, newer protocols utilize zero-knowledge proofs and other cryptographic tools to offer user safety and commercial confidentiality.
The filing clarifies that privacy does not have to come at the expense of regulatory oversight. Modern privacy chains can incorporate "view keys" and credential verification tools. These features allow an issuer to maintain visibility over relevant records and grant selective access to regulators or law enforcement when necessary, without exposing every transaction to the general public.
Coin Center argues that recordkeeping obligations should rest with the issuer, who should remain free to choose whether to delegate these functions to a third-party provider. The group asserts that the commission should not assume that total blockchain transparency is a prerequisite for compliance, as such a requirement could jeopardize the safety of users and the proprietary data of businesses.
The Push Against Unnecessary Reintermediation
A broader theme of the filing is the resistance to "unnecessary reintermediation." Coin Center cautions the SEC against forcing traditional financial roles—such as brokers, dealers, and exchanges—onto decentralized protocols where they are no longer needed. The group argues that securities laws should be "rules of general applicability," where the burden of compliance falls on the "least cost avoider"—typically the issuer.
In the vision presented by Coin Center, compliance logic can be embedded directly into the code of a tokenized security. For example, a smart contract could be programmed to only allow transfers between investors who have verified their identity through "user-sovereign identity tools." This would ensure that the security is only held by eligible participants, fulfilling the objectives of traditional intermediaries without the need for human intervention.
The filing acknowledges that some industry associations may lobby against this shift, as their business models depend on "state-mandated intermediation." Van Valkenburgh uses a historical analogy to drive the point home: the goal of regulation should be to ensure calls are connected safely, not to mandate the inclusion of a "nosey and expensive human operator at a switchboard" when automated technology has rendered the role obsolete.
Supporting Data and Economic Context
The push for a new regulatory framework comes as the digital asset market continues to mature and integrate with traditional finance. According to data from various market analytics firms, the market for tokenized "real-world assets" (RWAs)—including Treasury bills, real estate, and private equity—is projected to reach trillions of dollars by the end of the decade. Currently, billions of dollars in U.S. Treasury notes have already been tokenized on public blockchains like Ethereum and Polygon.
The cost of compliance remains a significant barrier to entry for many American fintech startups. A study by the Heritage Foundation previously noted that the "regulation by enforcement" approach created a "compliance moat" that favored incumbent financial institutions over disruptive newcomers. By adopting the rulemaking approach advocated by Coin Center, the SEC could potentially lower these barriers, encouraging domestic innovation and preventing the "brain drain" of developers moving to jurisdictions like the European Union or Singapore, which have already established comprehensive crypto frameworks (such as MiCA in the EU).
Chronology of Key Events Leading to the Filing
The timeline of the current shift in SEC policy reflects a broader change in the U.S. political and regulatory landscape regarding digital assets:
- 2021–2023: The SEC, under Chair Gary Gensler, pursues an enforcement-first strategy, filing lawsuits against Ripple, Coinbase, and Binance, and issuing dozens of subpoenas to DeFi developers.
- January 2024: The SEC approves the first spot Bitcoin ETFs, signaling a reluctant but significant step toward mainstream integration.
- Late 2024–Early 2025: Leadership changes at the SEC follow a shift in administrative priorities, with Paul Atkins assuming the role of Chair.
- February 2026: Commissioner Hester Peirce and Chair Paul Atkins appear together at ETHDenver, the world’s largest Ethereum developer conference, to signal a "new chapter" in SEC-crypto relations.
- March 5, 2026: Coin Center submits its formal written input, providing a roadmap for how the SEC can translate its stated goals into durable policy.
Broader Impact and Industry Implications
The implications of the SEC adopting Coin Center’s recommendations would be far-reaching for the global financial system. If the commission moves toward a model where compliance is "embedded in the instrument itself," it would validate the decentralized finance (DeFi) model and potentially trigger a massive migration of traditional assets to public blockchain infrastructure.
Legal experts suggest that such a move would also clarify the status of "secondary market" transactions. Currently, much of the legal uncertainty stems from whether a token remains a security when it is traded between individuals on a decentralized exchange. By focusing on the issuer’s obligations and the code of the asset, the SEC could provide a path for tokens to trade freely while maintaining investor protections.
Furthermore, the emphasis on "permissionless" technology serves as a defense against the creation of a "walled garden" financial system. By ensuring that decentralized public goods are not sidelined in favor of private, bank-controlled blockchains, the SEC would be upholding the original promise of cryptocurrency: a more open, transparent, and resilient financial architecture.
As the SEC begins its prospective rulemaking process, the industry will be watching closely to see if the commission adopts the "least cost avoider" principle. The outcome will likely determine whether the United States remains the global hub for blockchain innovation or if the next generation of financial technology is built elsewhere. Coin Center has expressed its readiness to assist the commission as these initiatives advance, marking a move from the courtroom back to the deliberative halls of policy development.
