Nikolas Sargeant
TL;DR
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Paul Atkins said the SEC is working toward tailored regulations for on-chain financial markets and blockchain-based trading systems.
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The SEC chair also restated his support for the CLARITY Act.
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 designed around traditional financial entities such as brokers, dealers, exchanges, clearing agencies, and transfer agents.
However, he stated that blockchain protocols increasingly combine many of these functions into unified automated systems, making current regulatory frameworks less effective for decentralized finance (DeFi) applications.
He stated that,
“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.”
SEC Discusses New Framework for On-chain Finance
Atkins mentioned several areas where the SEC is considering formal changes and regulatory clarification.
One key focus is the definition of an “exchange” as it applies to on-chain trading systems.
According to Atkins, the Commission is exploring a more “future-proof” regulatory framework through notice-and-comment rulemaking, while also considering a limited innovation pathway in the near term.
He also noted the need to revisit definitions surrounding brokers and dealers, particularly as blockchain-based interfaces and automated software systems continue to eliminate the difference between traditional intermediaries and decentralized protocols.
Atkin’s comment comes after a SEC staff revealed that the agency was examining the regulatory implications of software interfaces.
Another area under review is the definition of a “clearing agency” for blockchain-based settlement systems.
Atkins said near-instant settlement capabilities and algorithmic risk-management tools require a regulatory analysis that differs from traditional market infrastructure.
The SEC is also reviewing so-called crypto vaults, which allow users to generate passive yield by deploying digital assets into on-chain opportunities. Atkins said the agency plans to provide additional clarity regarding how such products may be treated under the Securities Act and the Investment Advisers Act.
Throughout the speech, Atkins pointed out that modern on-chain financial systems increasingly operate as hybrids of traditional and decentralized finance.
He argued that regulatory clarity should emerge through transparent rulemaking, targeted exemptive relief, and continued engagement with innovators, investors, and the broader public.
The SEC Chair also renewed his support for the proposed Digital Asset Market Clarity Act, commonly known as the CLARITY Act, which aims to establish a comprehensive statutory framework for digital assets in the United States.
