SEC Chair Paul Atkins said Friday the agency is considering formal rulemaking to modernize how securities regulations apply to blockchain-based financial markets and AI-powered financial applications, marking a significant shift from the enforcement-heavy stance of his predecessor.
Market Context
The announcement comes as digital asset firms have increasingly moved trading and settlement activity onchain. Blockchain-based financial protocols now combine functions traditionally handled by separate intermediaries—execution, collateral management, liquidity routing, strategy execution, and settlement—into single software systems. The SEC's consideration of new rules reflects broader market infrastructure evolution driven by decentralized technology adoption.
Analysis
Atkins framed the potential regulatory changes as part of a necessary adaptation to AI-driven and automated financial infrastructure. Speaking at the AI+ Expo in Washington, he highlighted how artificial intelligence agents will increasingly participate in markets at machine speed while blockchain rails enable instant value transfer. The chair emphasized that existing securities rules were designed around traditional market intermediaries such as brokers, exchanges, and clearinghouses—structures that newer blockchain systems often consolidate into protocol-level code.
"A single protocol can execute a trade, manage collateral, route liquidity, execute trading strategies through vault structures and settle the transaction," Atkins said. He noted that onchain market structures are increasingly hybrid in nature, combining elements of traditional and decentralized finance, requiring regulatory clarification across the spectrum of models that may implicate SEC statutes.
The remarks represent the latest step in the agency's pivot away from the enforcement-heavy approach under former Chair Gary Gensler. Under President Donald Trump's administration, the SEC has issued crypto-related staff guidance, no-action reliefs, and public statements aimed at reducing legal uncertainty for digital asset firms. Atkins reiterated support for congressional efforts to pass crypto market structure legislation, including the CLARITY Act, which would establish a shared regulatory framework between the SEC and Commodity Futures Trading Commission.
"Our job is to set the rules of play and referee the game, not to pick the winning team," Atkins said in his remarks.
Key Numbers
- May 14: Senate Banking Committee scheduled markup hearing for CLARITY Act
- January 2026: Market structure bill entered legislative limbo with stablecoin yield provisions stalling advancement
What to Watch
Market participants should monitor the SEC's formal rulemaking timeline and specific proposals for onchain trading systems. The Senate Banking Committee markup of the CLARITY Act on May 14 represents a key legislative catalyst that could shape regulatory jurisdiction between the SEC and CFTC. Firms operating blockchain-based financial applications, crypto vaults, and automated trading protocols should prepare for potential comment periods as the agency uses its exemptive authorities to clarify how existing statutes apply to emerging market structures.