SEC Chair Atkins Calls for New Rulemaking on Onchain Market Structures

SEC Chair Paul Atkins stated on Friday at an artificial intelligence expo hosted by the Special Competitive Studies Project that the Securities and Exchange Commission needs to clarify how its regulatory framework applies to software applications as it considers future rules for onchain financial markets. Atkins noted that software applications do not fit neatly into the SEC’s existing regulatory categories such as clearing agency, broker, or exchange.

Regulatory Framework Gaps

Atkins highlighted the complexity of onchain systems, stating: “A single protocol can execute a trade, manage collateral, route liquidity, execute trading strategies through vault structures, and settle the transaction—all within a unified, automated system, often within seconds.”

He emphasized that onchain market structures are often hybrid in nature, combining elements of traditional and decentralized finance, requiring the SEC to clarify how its statutes apply across the spectrum of these models.

Proposed Rulemaking and Clarifications

Atkins called for the SEC to pursue notice-and-comment rulemaking to revisit definitions related to exchange, clearing agency, and broker definitions as they apply to onchain trading systems. He also called for more clarity around crypto vaults—onchain software applications that allow users to earn yield passively.

Atkins stated: “We should clarify how the Commission views the spectrum of models that may implicate our statutes through notice and comment rulemaking, using our exemptive authorities where necessary and prudent, all with full participation from innovators, investors, and the public alike.”

Recent SEC Staff Action

Last month, the SEC’s Division of Trading and Markets released a staff statement delineating that interfaces, such as DeFi wallets, would generally not be considered brokers.

SEC’s Shifting Crypto Stance

Atkins’ remarks underscore the SEC’s increasingly crypto-friendly posture compared with former Chair Gary Gensler, who took a more cautious approach to digital assets and argued that most cryptocurrencies fell under the agency’s jurisdiction. Since taking office, Atkins has floated the idea of an innovation exemption for tokenized securities and overseen the release of a taxonomy aimed at clarifying which digital assets may qualify as securities.

Industry Response

Industry groups praised the remarks. The DeFi Education Fund described Atkins’ comments as “powerful,” while the Hyperliquid Policy Center said it was encouraged to see “a Chairman willing to map these systems to existing legal frameworks on their own terms, rather than force them into legacy categories built for legacy architecture.”