Atkins pushes formal SEC rulemaking for on-chain markets and crypto vaults

SEC Chairman Paul Atkins on Friday committed the agency to formal rulemaking for on-chain markets, naming four areas where new rules will replace enforcement: crypto trading systems, broker-dealer definitions, clearing and settlement, and crypto vaults under the Securities Act.

The shift, set out in a speech at the Special Competitive Studies Project’s AI+ Expo in Washington, breaks with the enforcement-led approach of his predecessor Gary Gensler. Atkins said existing rules, written for brokers, exchanges and clearinghouses, no longer fit blockchain systems that execute trades, manage collateral, route liquidity and settle transactions through a single software protocol.

“A single protocol can execute a trade, manage collateral, route liquidity, execute trading strategies through vault structures and settle the transaction,” Atkins said. “Our job is to set the rules of play and referee the game, not to pick the winning team.”

The SEC will use notice-and-comment rulemaking for each area, Atkins said. He gave no timeline.

On crypto trading, the SEC will define how blockchain venues fit within its perimeter. Years of litigation between the agency and crypto exchanges have left the question open. On broker-dealer definitions, Atkins flagged the gap between rules written for human intermediaries and software interfaces that route orders without a middleman.

The clearing and settlement review reaches deeper. The “clearing agency” model assumes a central counterparty managing risk; on-chain venues settle in seconds with risk priced into code. Atkins said the SEC needs to rethink what supervision looks like in that setting.

Crypto vaults, which Atkins described as on-chain applications that let users earn passive yield by deploying assets into blockchain-based opportunities, are the fourth area. They have grown for years without a dedicated regulatory regime, and the SEC will now decide how the Securities Act applies.

“As the Commission considers these policy initiatives, we should remember that on-chain market structures today are often hybrid in nature, combining elements of what are referred to as ‘traditional’ and ‘decentralized’ finance,” Atkins said.

He told the audience the SEC would use its exemptive authority “where necessary and prudent” and would coordinate with other regulators to avoid a patchwork of rules.

What the speech signals

Gensler argued existing securities laws already covered most crypto activity and brought enforcement actions against token issuers, exchanges and DeFi protocols. Atkins is taking the opposite position. The agency under him has already issued staff guidance saying DeFi wallet interfaces are not brokers, easing the legal pressure on developers.

Friday’s remarks went further, accepting that some parts of decentralized finance need rules written for them rather than rules retrofitted from centralized intermediaries. Atkins drew a parallel to electronic trading in the late 1990s and Regulation ATS, the framework that let alternative electronic venues operate without registering as full national exchanges.

The DeFi Education Fund called the remarks “powerful” in a post on X. The Hyperliquid Policy Center said it welcomed 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.”

Industry-regulator relations have thawed since the start of 2026. In January, the SEC and the Commodity Futures Trading Commission introduced a joint framework that splits digital assets into digital commodities, stablecoins, digital collectibles and digital securities, a categorization the industry had lobbied for since the prior administration.

The CLARITY Act push

Atkins renewed his call for Congress to pass the CLARITY Act, which would create a shared rulebook between the SEC and the CFTC for digital assets.

“While I intend to future-proof our efforts through notice and comment rulemaking, there is no more powerful way to future-proof than enshrining sound statutory language in law,” he said.

The bill stalled in Congress earlier this year. It regained momentum on May 1, when lawmakers reached a compromise on stablecoin yield and rewards. The deal restricts crypto firms from paying interest on passive stablecoin deposits but allows rewards tied to trading, transactions or staking.

Atkins warned that regulatory rigidity pushed innovation offshore, citing the 2022 collapse of FTX, the Bahamas-based exchange, as the case where U.S. legal uncertainty drove crypto activity outside U.S. oversight.

What comes next

Notice-and-comment rulemaking takes months. Proposed rules go in the Federal Register, the public comments for 60 to 90 days, the SEC issues a final rule. Any formal rulemaking would run alongside the CLARITY Act effort and the SEC’s existing program of staff guidance and no-action letters.

Atkins told Reuters in March that the agency planned to release a crypto safe-harbor proposal for public comment “in the coming weeks.” The SEC has not set a timeline for the four areas outlined Friday.

If the four areas turn into binding rules, they would be the first formal regulatory framework for DeFi protocols in a major jurisdiction. Europe’s MiCA covers centralized crypto intermediaries; licensing regimes in Singapore and Dubai do the same. Neither reaches decentralized protocols at the level Atkins is proposing. With the largest DeFi protocols processing billions of dollars in weekly trading volume across multiple jurisdictions, SEC guidance often becomes an informal global standard even for projects headquartered overseas.