• SEC Chair Paul Atkins said the agency is working toward tailored regulations for on-chain financial markets and blockchain-based trading systems.
• He outlined potential rulemaking around crypto exchanges, broker-dealer classifications, clearing systems, and on-chain yield products.
• Atkins reemphasized his support for the CLARITY bill.

US Securities & Exchange Commission (SEC) Chair Paul Atkins outlined a more forward-looking regulatory approach to blockchain-based finance on Friday, signaling the agency’s intention to develop clearer rules tailored to the rapidly evolving structure of on-chain markets.

Speaking at the Special Competitive Studies Project AI+ Expo, Atkins said existing securities regulations were built around traditional financial intermediaries such as brokers, dealers, exchanges, clearing agencies and transfer agents.

However, he noted that blockchain protocols increasingly combine many of these functions into unified automated systems, making current regulatory frameworks less effective for decentralized finance (DeFi) applications.

“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 stated.

SEC explores new framework for on-chain finance

Atkins outlined several areas where the agency is considering formal rulemaking and regulatory clarification. A key focus is the definition of an “exchange” as it applies to on-chain trading systems.

Atkins said the Commission is evaluating a more “future-proof” framework through notice-and-comment rulemaking, alongside the possibility of a limited innovation pathway in the near term.

He also highlighted the need to revisit definitions of brokers and dealers, particularly as blockchain-based interfaces and software systems increasingly blur the lines between traditional intermediaries and automated protocols. The comments follow a recent SEC staff statement addressing software interfaces and their regulatory implications.

Another priority involves reassessing the definition of a “clearing agency” for on-chain settlement systems. Atkins said the near-instantaneous settlement capabilities of blockchain infrastructure, combined with algorithmic risk management tools, require a fresh regulatory analysis distinct from traditional market structures.

The SEC is also examining so-called “crypto vaults,” which allow users to earn passive yield by deploying digital assets into on-chain opportunities. Atkins said the agency intends to provide greater clarity regarding how such products may fall under the Securities Act and the Investment Advisers Act.

Throughout the speech, Atkins emphasized that today’s on-chain financial systems often operate as hybrids of traditional and decentralized finance. He argued that regulatory clarity should emerge through transparent rulemaking processes, exemptive relief where appropriate, and active engagement with innovators, investors, and the broader public.

“Our job is to set the rules of play and referee the game, not to pick the winning team,” Atkins said, reiterating the SEC’s mandate to protect investors, maintain fair and orderly markets, and facilitate capital formation. 

Atkins also renewed his support for the proposed Digital Asset Market Clarity Act, commonly referred to as the CLARITY Act, which aims to establish a comprehensive statutory framework for digital assets in the US.