SEC Explores Regulatory Path for Onchain Trading

U.S. Securities and Exchange Commission Chairman Paul Atkins announced on Friday that the agency is exploring a limited regulatory pathway for onchain trading systems, drawing parallels to its approach to electronic markets in the 1990s. Speaking at the AI Expo in Washington, Atkins outlined plans for conditional relief to allow certain blockchain-based platforms to operate while the SEC develops formal rules through notice-and-comment rulemaking.

Atkins explained that traditional securities regulations, designed for distinct intermediaries like exchanges, broker-dealers, clearing agencies, and transfer agents, do not align neatly with onchain protocols. These software systems often combine multiple functions, such as matching orders, executing trades, routing liquidity, managing collateral, settling transactions, and updating ownership records, all automatically and often within seconds. "A single protocol can execute a trade, manage collateral, route liquidity, execute trading strategies through vault structures and settle the transaction," Atkins said.

The proposed pathway mirrors the SEC's handling of electronic trading two decades ago. In the 1990s, the agency issued ad hoc...