SEC Chair Atkins Proposes Rulemaking for Onchain Market Structures

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

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

Hybrid Market Structures

“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.”

Recent SEC Actions

Atkins’ remarks reflect 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. Since taking office, Atkins has floated the idea of an innovation exemption for tokenized securities and overseen the release of a token taxonomy aimed at clarifying which digital assets may qualify as securities.

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

Industry Response

Industry groups praised Atkins’ remarks. The DeFi Education Fund described his 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.”