“Number Go Down” and Other Schadenfreude: The SEC at ETHDenver
On February 18, 2026, SEC Chairman Paul S. Atkins and Commissioner Hester M. Peirce appeared together at ETHDenver for a public conversation titled “Number Go Down and other Schadenfreude.” The setting was informal, but the substance was not. The discussion offered one of the clearest articulations to date of how current SEC leadership wants the market to understand its approach to crypto regulation.
Commissioner Peirce opened by describing what she characterized as a year of movement toward “crypto clarity.” She recited a detailed list of steps the Commission has taken: written responses to difficult technical questions; in-depth roundtables on the definition of a security, trading, custody, tokenization, DeFi, and privacy; meetings with developers both in Washington and around the country; technical assistance to Congress; coordination with the CFTC through a joint initiative; staff guidance and FAQs addressing topics such as mining, staking, meme coins, and stablecoins; withdrawal of staff guidance she described as unhelpful, including SAB 121; publication of a staff statement on broker-dealer custody of crypto asset securities; a cross-divisional statement outlining a taxonomy for tokenized securities; approval of generic listing standards for crypto ETPs; issuance of no-action letters; and the beginning of rule design and potential exemptive relief intended to support a durable regulatory framework.
The message was obvious. The Commission wants the industry to understand that it is building a record and working through formal mechanisms rather than relying exclusively on enforcement actions to define the law.
When asked what to expect next, Chairman Atkins previewed several areas the Commission and staff expect to consider in the coming months. He referenced a Commission-level framework explaining how the SEC thinks about crypto assets that are subject to an investment contract, including how such an investment contract is formed and how it is terminated. He also pointed to a potential “innovation exemption” that would facilitate limited trading of certain tokenized securities on novel platforms, with the express goal of informing a longer-term regulatory framework. In addition, he mentioned a rulemaking proposal establishing pathways for raising capital in connection with the sale of crypto assets, further no-action letters and exemptive orders, rulemaking on custody of non-security crypto assets by broker-dealers, modernization of transfer agent rules to accommodate blockchain-based recordkeeping, and additional guidance to address how existing rules apply to specific factual circumstances.
Commissioner Peirce devoted particular attention to the proposed innovation exemption. She cautioned against inflated expectations, observing that some in the market appear to treat the concept as either a cure-all or a threat to the existing financial system. In her telling, it is neither. She described it as an incremental step intended to facilitate integration of tokenized securities into the current system without attempting to redesign that system overnight.
Chairman Atkins elaborated on what such an exemption might entail. He spoke of enabling both traditional financial institutions and crypto-native firms to experiment, including trading certain tokenized securities through automated market makers on public, permissionless blockchains. He acknowledged that no single person or group may control such mechanisms and emphasized that investors, rather than the SEC, should decide whether to engage directly with decentralized applications or through intermediaries. He raised the possibility of a safe harbor for participants facilitating such trading.
In practical terms, he described a potential structure in which issuers could work with a transfer agent or other tokenization agent to tokenize securities for onchain trading. Trading volume might be limited. Buyers and sellers could be required to undergo a whitelist process. The relief would be temporary, but sufficiently durable to allow learning and to support development of more permanent rules, including registration pathways where appropriate.
Atkins also noted what he described as an interesting feature of the technology: the ability to embed compliance into smart contract code. He referenced founders coding resale restrictions directly into tokenized securities, reimagining issuer communications with security holders through blockchain, and the use of privacy-preserving technologies such as zero-knowledge proofs to achieve Bank Secrecy Act objectives while reducing the need for wholesale surrender of personal data. Commissioner Peirce responded by underscoring her concerns about financial surveillance and her view that privacy remains a critical value in the design of financial systems.
The conversation then turned to declining crypto prices. Peirce asked directly whether regulators should panic or focus their attention on falling valuations. Chairman Atkins answered plainly: daily market swings are not the regulator’s responsibility. The SEC’s role is to ensure that market participants have the disclosures necessary to make informed decisions. Markets rise and fall for many reasons. Peirce agreed, characterizing the current mood as one of “number go down” and noting that some critics are reacting with what she termed “Schadenfreude.” She added that regulatory clarity can create an environment conducive to building, but regulation itself is not the source of economic value. Builders must create products that people want and use.
Near the close of the discussion, Commissioner Peirce made a pointed observation about the past. She said that the Commission’s prior unwillingness to work productively with token issuers had produced a “perverse result”: tokens that conferred no meaningful rights were less likely to draw regulatory scrutiny than rights-bearing tokens. The consequence, she suggested, is a market in which most tokens do not grant their holders substantive rights. She expressed a desire to move toward a regime in which developers would not fear creating tokens that clearly fall within the securities category.
The ETHDenver discussion did not announce final rules. It did not resolve longstanding doctrinal disputes. It did, however, provide a more coherent account of the Commission’s intended direction: greater use of formal frameworks and exemptions, incremental accommodation of tokenization within existing structures, modernization of custody and recordkeeping rules, and a clear statement that price volatility alone will not drive regulatory policy.
For practitioners and market participants, the speech is best understood as a statement of priorities and posture. The details will matter, and the rule text will matter more. But for the first time in some time, the Commission’s leadership has publicly outlined a path that relies on defined frameworks and structured relief rather than ad hoc litigation to shape the crypto market.
That’s all for now,
Braeden
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About the author
K. Braeden Anderson is a Partner at Gesmer Updegrove LLP, where he leads the firm’s Securities Enforcement & Investigations practice, and chairs Mackrell International’s Blockchain & Digital Assets Group and Securities Enforcement & Investigations Group. He is a nationally recognized securities regulatory and enforcement attorney whose practice sits at the intersection of traditional financial regulation and emerging technology. He has been recognized in Best Lawyers: Ones to Watch® in America (2025) for Financial Services Regulation Law and Securities Regulation, and was named the #1 most-read fintech thought leader in the United States in Mondaq’s Spring 2025 Thought Leadership Awards.
Before joining Gesmer Updegrove, Braeden founded a Washington, D.C.–based law firm. He previously served as Assistant General Counsel at Robinhood Markets, Inc. (NASDAQ: HOOD), advising on high-stakes regulatory and enforcement matters, and earlier practiced at Kirkland & Ellis LLP and Sidley Austin LLP in New York and Washington, D.C.
Braeden is a prominent voice in securities and crypto regulation and a leading example of how lawyers can build brand through education and content. He publishes a weekly newsletter reaching more than 20,000 legal and financial professionals, runs a YouTube channel with over 160,000 subscribers, and regularly produces written and multimedia thought leadership through his blog, Anderson Insights. His work focuses on enforcement trends, fintech regulation, and the evolving role of digital assets in capital markets.
