SEC Chair Atkins Proposes Rulemaking for Onchain Market Structures

SEC Chair Paul Atkins said Friday that the Securities and Exchange Commission needs to develop clearer regulatory guidance for software applications as it considers writing rules for onchain financial markets, according to remarks made at an artificial intelligence expo hosted by the Special Competitive Studies Project. Atkins emphasized that software applications do not fit neatly into the SEC’s existing regulatory categories, such as clearing agencies, brokers, or exchanges.

Software Applications and Regulatory Gaps

“Software applications today do not always organize themselves neatly along these categorical lines,” Atkins said. “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.”

Atkins noted that onchain market structures are often hybrid in nature, combining elements of traditional and decentralized finance. He called for the SEC to use notice and comment rulemaking to revisit definitions related to exchanges, clearing agencies, and brokers as they apply to onchain trading systems. He also called for more clarity around crypto vaults—onchain software applications that allow people to earn yield passively.

Shift Toward Crypto-Friendly Policy

Atkins’ remarks underscore the SEC’s increasingly crypto-friendly posture under his leadership 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.

Recent SEC Actions on DeFi

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

Industry Response

Industry groups praised Atkins’ 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.”

“As the Commission considers these policy initiatives, we should remember that onchain market structures today are often hybrid in nature, combining elements of what are often referred to as ‘traditional’ and ‘decentralized’ finance,” Atkins said. “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.”