SEC Chair Atkins Urges Rules for On-Chain Market Apps

SEC Chair Paul Atkins urged the Securities and Exchange Commission to use notice-and-comment rulemaking to clarify how existing securities laws and agency definitions apply to on-chain software applications and hybrid market structures. He made the comments Friday at an artificial intelligence expo hosted by the Special Competitive Studies Project.

Atkins said many modern on-chain protocols combine functions that regulators traditionally assign to different entities. He noted, “Software applications today do not always organize themselves neatly along these categorical lines,” and added that a single protocol can execute trades, manage collateral, route liquidity, run trading strategies through vault structures, and settle transactions in an automated sequence.

The chair recommended revisiting the legal definitions of exchange, clearing agency and broker to map them to on-chain market structures. He called on the agency to use its exemptive powers where appropriate and to solicit input from innovators, investors and the public through formal rulemaking. “We should clarify how the Commission views the spectrum of models that may implicate our statutes through notice and comment rulemaking,” he said.

Since becoming chair, Atkins has proposed a taxonomy aimed at clarifying which digital tokens may qualify as securities and has suggested an innovation exemption for tokenized securities. Last month, the SEC Division of Trading and Markets issued a staff statement saying that interfaces such as decentralized finance wallets would generally not be treated as brokers.

Industry groups responded positively. The DeFi Education Fund described the remarks as “powerful,” and the Hyperliquid Policy Center said it welcomed a chair willing to map these systems to existing legal frameworks on their own terms.

SEC statutes for exchanges, brokers and clearing agencies were written for traditional finance. Regulators and market participants have said applying those categories to decentralized systems is challenging because automated code and distributed networks can perform multiple roles without a single centralized operator.