SEC signals onchain rulemaking
- On May 8, SEC chair Paul Atkins said the agency should consider formal rulemaking for onchain trading, settlement, and AI finance at a Washington expo. - Atkins singled out broker-dealer, exchange, and clearing-agency definitions, and said the SEC should clarify which software and general-purpose onchain activities sit outside them. - That matters because the SEC is shifting from lawsuit-first crypto policy toward writing actual rules for tokenized and automated markets.
Blockchain trading systems are starting to look less like a crypto side quest and more like market plumbing. That creates a basic problem for the SEC — the rulebook was built for brokers, exchanges, and clearinghouses with identifiable operators, not software that matches trades, settles them onchain, or runs parts of the workflow automatically. On May 8, SEC chair Paul Atkins said the agency should consider writing new rules to deal with that gap, and he tied the same question to AI-driven finance too. ### What did Atkins actually say? At the Special Competitive Studies Project AI+ Expo in Washington, Atkins said the SEC should “consider rulemaking” around several pieces of onchain market structure. He pointed to broker-dealer rules, exchange rules, and the definition of “clearing agency,” and he framed the issue as one of fit — whether old categories still map cleanly onto blockchain-based systems and software applications. (sec.gov) ### Why is “software applications” the loaded phrase? Because that is where the hard legal question sits. A traditional market intermediary is a firm with employees, licenses, and operational control. An onchain protocol can be open-source code, a front end, a set of validators, or some hybrid of all three. Atkins flagged the need to clarify how the SEC views that whole spectrum, including which general-purpose software activity falls outside securities-law definitions altogether. (sec.gov) ### Why does clearing matter so much? Clearing is the back half of a securities trade — the part where obligations get finalized and assets and cash actually move. In regular markets, that job sits with central institutions. Onchain systems can collapse trading, clearing, and settlement into one workflow, basically turning code into part of the market infrastructure. That is why Atkins specifically mentioned the “clearing agency” definition. If the SEC redraws that boundary, it changes who has to register and who does not. (sec.gov) ### Where does AI come into this? Atkins bundled AI-driven finance into the same broader regulatory problem: software is taking on functions that used to belong to clearly bounded institutions. The common thread is not crypto hype. It is automation inside capital markets. If software recommends, routes, executes, or settles financial activity, the SEC has to decide when that is just a tool and when it becomes a regulated market actor. (sec.gov) ### Is this a real policy shift? Yes — at least in direction. Atkins has been signaling since returning to the SEC in April 2025 that he wants a “fit-for-purpose” framework for crypto markets and that existing custody and broker-dealer rules may need work. The new part is the explicit move from broad complaints about uncertainty to possible notice-and-comment rulemaking on onchain market structure itself. That is a much more concrete step. (sec.gov) ### Does this mean DeFi gets a free pass? No. Atkins did not say onchain systems are outside securities law. The message was narrower and more important: the SEC may stop pretending every blockchain-based market function fits neatly into old boxes. Some activities could still require registration. Others might get carved out, clarified, or handled through exemptions. The catch is that clearer rules can widen the agency’s reach as easily as they can limit it. (sec.gov) ### Why are markets paying attention? Because enforcement tells firms what the SEC dislikes after the fact. Rulemaking tells them what structure the agency might actually permit. For tokenized securities, onchain settlement, and hybrid TradFi-DeFi platforms, that difference is huge. It affects product design, licensing strategy, and whether serious firms build in the U.S. at all. (sec.gov) ### Bottom line? The headline is not that the SEC blessed DeFi. It is that the chair publicly treated onchain execution, clearing, settlement, and financial software as core market-structure questions. That moves the conversation out of the “is crypto real?” phase and into the much more consequential one — who gets regulated, for what function, and under which rules. (sec.gov 1) (sec.gov 2)
