Author: Zhang Feng

On September 29, U.S. SEC Chairman Paul Atkins pledged to implement minimal regulation and accelerate the proposal put forth by Trump to eliminate quarterly earnings reports for companies, allowing publicly traded companies to release financial reports every six months instead of every 90 days. This policy shift not only marks a significant turn in the SEC's regulatory approach but also reflects the fundamental differences in the pace of development between the crypto business and traditional financial markets.

"The government should implement 'minimum effective dose' regulation—protecting investors while allowing businesses to grow," wrote SEC Chairman Paul Atkins in a recent commentary for the Financial Times.

I. Regulatory Transformation: SEC's "Minimum Effective Dose" Principle

The SEC is undergoing a complete shift from the stringent regulations of the Biden administration to a "light-touch" regulatory approach. Chairman Atkins criticized the "aggressive regulatory and enforcement stance" of his predecessor Gary Gensler, marking a historic turning point in U.S. financial regulation. Atkins clearly stated that it is time for the "SEC to remove its influence and let the market determine the best reporting frequency based on factors such as company industry, size, and investor expectations." He argued that regulatory changes should not be driven by political trends and sharply criticized the European regulatory model as being driven by "theorists."

This regulatory philosophy is summarized as "minimum effective dose" regulation—finding a balance between protecting investors and allowing businesses to thrive. The SEC is not only considering the elimination of quarterly reports but has also shifted its stance in the cryptocurrency sector from Gensler's "aggressive suppression" to "gentle acceptance." This confirms that the "light-touch" regulatory approach will be fully implemented.

II. Crypto Business: The Unique Pace of Development and Information Disclosure

The crypto asset market has a development pace and technical characteristics that are fundamentally different from traditional finance, which determines its unique information disclosure needs.

The information disclosure methods of crypto businesses are significantly different from traditional companies, with core features including technology-driven real-time transparency and community-based communication mechanisms. Traditional quarterly reports rely on lagging financial data, while crypto projects depend on real-time on-chain data (such as trading volume and active addresses), with key decisions made through decentralized governance proposals voted on by the community, and progress disclosed through technical roadmaps and community forum updates. This disclosure method stems from the agile development, global distribution, and unique business nature of token economic models, shifting information disclosure from periodic and standardized to continuous, technical, and community-oriented.

The speed of technological iteration is extremely fast. Crypto projects typically follow an agile development model, continuously iterating products based on market feedback and code testing. Unlike traditional companies that plan development on a quarterly basis, crypto projects may undergo multiple protocol upgrades and feature updates within a month, making quarterly financial reports often unable to accurately reflect this rapidly changing technological environment.

Business models cross national borders. Crypto businesses are inherently global, unrestricted by geographical boundaries, with their user base, liquidity provision, and governance structures dispersed worldwide. This makes it difficult for quarterly financial reports based on a single jurisdiction to comprehensively reflect business conditions, necessitating a more flexible and customized information disclosure approach.

Market dynamics are complex and ever-changing. The crypto asset market operates 24/7, with price volatility far exceeding that of traditional assets. At the same time, DeFi protocols and token economic models have created entirely new business models, with value creation and revenue sources distinctly different from traditional companies.

The SEC's "Guidelines for Securities Issuance and Registration Disclosure in the Crypto Asset Market," released in April 2025, requires companies to detail their business models, token functions, technical architecture, and development milestones, reflecting an acknowledgment of the uniqueness of crypto businesses.

III. Self-Determined Frequency: Why is it Beneficial for Crypto Businesses?

Allowing crypto companies to self-determine the frequency of information disclosure will bring multiple positive impacts to this emerging industry.

Improving the quality of information disclosure. Self-determining report frequency does not equate to reduced transparency. On the contrary, it allows project teams to provide more comprehensive and in-depth information disclosure at critical moments, rather than rushing reports to meet quarterly deadlines. After the UK reinstated the semi-annual reporting system in 2014, some large companies continued to choose to publish quarterly reports based on their own needs, proving that the market can effectively determine the frequency and depth of information disclosure.

Matching the pace of technological development. The semi-annual reporting system aligns better with the technical development cycles of crypto projects. Crypto projects typically advance according to technical roadmaps, and key protocol upgrades and product releases do not necessarily synchronize with financial quarters. Self-determining disclosure frequency allows project teams to provide comprehensive information disclosure after achieving important technical milestones, rather than mechanically reporting on a fixed quarterly schedule.

Focusing on long-term value creation. Eliminating quarterly reports helps reduce excessive focus on short-term price fluctuations. The crypto market is already known for its high volatility, and quarterly reports may exacerbate this short-termism. The semi-annual reporting system can encourage investors to focus on fundamentals and long-term technological progress rather than quarterly financial data.

Reducing compliance costs. Frequent report preparation requires significant investment in legal, accounting, and human resources. For many crypto startups still developing products and building user bases, these costs are particularly burdensome. Reducing disclosure frequency can directly lower compliance costs (audit, personnel, time), allowing them to focus more on long-term strategies rather than short-term performance fluctuations.

IV. Investor Protection: Balancing Information Disclosure Reform and Right to Know

The SEC's plan to eliminate quarterly reports has raised concerns about whether it will harm investors' right to know. This issue requires a comprehensive analysis of the different needs of investors and the new possibilities brought about by technological changes.

Current information disclosure requirements are already difficult to apply to the uniqueness of the crypto market. Crypto projects typically provide real-time business metrics through on-chain data, such as trading volume, number of active addresses, and total locked value (TVL). This real-time data may better reflect the health of a project than quarterly financial statements. Additionally, information disclosure for crypto projects can be achieved through blockchain technology in a more transparent and tamper-proof manner, such as recording important information directly on a distributed ledger.

However, on the other hand, there are indeed differences in information access capabilities. Institutional investors typically have dedicated teams and advanced tools to continuously track the dynamics of their portfolio companies, while retail investors mainly rely on publicly available financial reports. Currently, the A-share market is still dominated by retail investors, who have weak information access capabilities; eliminating quarterly reports will significantly exacerbate information asymmetry, which is detrimental to investor protection.

The path to balance lies in aligning with business realities. The SEC could consider differentiated disclosure requirements: rewarding compliant listed companies by reducing disclosure frequency; maintaining or even increasing disclosure frequency for companies with histories of fraud or internal governance issues. A 2019 survey by the CFA Institute of global members showed that 59% disagreed with reducing report frequency, citing potential information leakage and market unfairness. Six months is a long time for information leakage, and the information provided to certain investors may be asymmetric, potentially leading to leaks that undermine market fairness.

V. Global Impact: The Spillover Effect of U.S. Regulatory Shift

The SEC's "light-touch" regulatory shift may have profound implications for global compliance trends, reshaping the competitive landscape of international financial regulation.

This shift in the U.S. may force other financial centers to reassess their regulatory frameworks to maintain competitiveness. If the U.S. successfully attracts crypto companies and investors through more flexible disclosure requirements, other strictly regulated regions may face pressure from business outflows.

Atkins has explicitly criticized the European regulatory model driven by "theorists," specifically naming the EU's Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD). He believes these directives require companies to disclose "matters that may have social significance but generally lack financial importance," and these mandatory requirements may shift costs onto U.S. investors and customers.

The SEC's shift may accelerate the global trend of differentiated disclosure: different companies applying different disclosure standards based on their size, industry, and investor structure. At the same time, technology-driven disclosure may replace fixed frequency disclosure, with real-time data access and blockchain verification becoming standard practices for future information disclosure. Emphasis on substantive information will also increase, shifting regulatory focus from checking whether fixed reporting requirements are met to assessing whether companies provide substantive information relevant to investment decisions.

The SEC's plan to eliminate quarterly reports reflects the fundamental differences in the pace of development between crypto businesses and traditional companies, and also signals the future direction of technology-driven financial regulation. The regulatory "thumb" is moving away from the market scale, and blockchain technology itself may be the most effective path to achieving truly "transparent" disclosure. The history of financial regulation has never simply swung between strict and lenient; it has sought the best balance while continuously adapting to market changes.

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