The US Securities and Exchange Commission has long been the world’s most influential financial regulator, which helps to ensure that our capital markets are the deepest, fair and most accessible in the world. But its continued relevance depends on whether it can do more than just responding to innovation – it must proactively promote it.

For almost a century, SEC has adapted to develop markets, new technologies and greater retail participation. In its best moments, the agency has embraced innovation in service for transparency, investor protection and capital formation. But in recent years it has been cleared from this inheritance – nowhere visible than in its approach to crypto and blockchain.

Tuongvy Le is speaking in Consensus 2025 in Toronto 14-16. May.

The good news is, with a change in leadership and a more open attitude that arises, has SEC a chance to course correct. But the bigger question is: How do we make that change permanently? How do we build innovation in SEC’s DNA so that the next promising economic technology is not suffocated in its crib?

I spent almost six years in SEC, first as a senior adviser in the Department of Enforcement and then as chief lawyer in the office of regulatory and intergovernmental affairs. I have since held senior legal and political roles in cryptic companies across the ecosystem. From both perspectives, one thing is clear: SEC can perform its mission more effectively – and maintain its global leadership – only if it becomes a proactive partner in financial innovation.

Sec on its best

SEC has a proud history of embracing change in favor of both investors and markets. In the 1990s, it digitized business archives through Edgar and replaced paper documents with searchable databases. It later approved the ATS regulations, enabling the increase in alternative trading systems that increased competition and liquidity. ETFs that were once new are now mainstream products that offer low costs, diversified exposure to a wide range of assets. Recently, trade in fractional sharing has authorized millions of retail investors to own a sample of companies they could once only admire a long way.

A particularly relevant example, as SEC thinks about how to regulate crypto is the agency’s treatment of asset-supported securities. In the 1980s and 1990s, SEC acknowledged that these complex financial products did not fit nicely into existing revealing regimes. After many years of study and non-action letters, it developed a tailor-made revelation framework in the 2004 refined further in 2014-the-it-balanced innovation with investor protection. And it didn’t have to bring hundreds of enforcement measures to do so.

When SEC fell afterwards

There are also times that SEC could not adapt to the detriment of both investors and markets. It was slow to respond to the increase in high -frequency trade, which contributed to the flash crash in 2010. It took years to implement the crowdfunding rules approved by the Jobs Act. It was limping on digital reporting standards and delayed wider access to market data.

And for large parts of the last few years its attitude towards crypto turned from caution to direct hostility. Instead of issuing clear rules for digital assets, the Agency pursued a Scattershot enforcement campaign – often against companies that tried to comply with good faith. Many of these actions did not even involve fraud or investor loss. Meanwhile, US cryptic companies fled abroad and a global industry flourished without us.

Even SEC’s Grusging approval of Spot Bitcoin ETFs in 2024 came only after it was forced by a federal court. And while the agency at one point was talking about creating a crypto information framework that corresponds to what it did for ABS, it never followed.

Innovation is not the enemy

Crypto may be new, but SEC has faced this challenge before. It knows how to modernize your rules to meet new realities. What is different now is the opportunity to exploit innovation – not just regulate it.

Take Blockchain technology. It can enable almost instant trade settlement, reduce the risk and free up capital. It could improve market transparency through unchanging items and transaction data in real time. It can lower operating costs by reducing intermediaries. And tokenization could expand access to private markets and difficult to reach asset classes that benefit both issuers and investors.

Ironically, SEC has not seriously explored how blockchain could improve its own market supervision. It’s a miss. But it’s not too late.

A plan for the future

So what would it look like to build innovation in SEC’s core task?

• Revise SEC’s mandate: Congress should change the Securities Exchange Act of 1934 to explicitly include the promotion of innovation and modernization along with investor protection, market integrity and capital formation.
• Rethink Metrics of Success: SEC should not measure success only by the number of enforcement measures collected or sanctions. It should also look at capital formation, investor trust and secure adoption of new technologies.
• Create an innovation office: A dedicated, authorized team should collaborate with entrepreneurs, technologists and academics to guide responsible innovation – like similar offices in the UK and Singapore have done.
• Adopt risk -based regulation: Not every new product or platform needs full regulatory treatment on the first day. Pilot programs, secure ports and regulatory sandboxes can help innovators test ideas while maintaining appropriate protective frames.
• Invest in education and education: SEC staff need better relocation in new technologies. Interdisciplinary expertise should be rewarded and cultivated.

These are not radical ideas – they are proven tools drawn from SEC’s own Playbook.

In a global race to define the financing of the future, SEC has a choice: lead or fall afterwards. Its greatest strength has always been its credibility and ability to adapt.

The next generation of investors and entrepreneurs are not waiting for the 20th century rules to catch up for the 21st century innovation. They shouldn’t have to. If SEC wants to remain the gold standard, it must adapt again – not only to the present, but to what is coming next.