SEC Chair Atkins Calls for DeFi Rulemaking

SEC Chair Paul Atkins on Friday urged the Securities and Exchange Commission to begin formal rulemaking to clarify how legal definitions such as “exchange,” “broker” and “clearing agency” apply to decentralized finance platforms and on‑chain trading systems. He made the remarks at the Special Competitive Studies Project AI+ Expo in Washington. Atkins said securities rules written for traditional intermediaries do not always fit blockchain protocols that execute trading, settlement, liquidity routing and collateral management through software. “Software applications today do not always organize themselves neatly along these categorical lines,” he wrote in prepared remarks. Atkins called for a notice‑and‑comment process to map long‑standing legal terms to modern on‑chain markets. He proposed that the commission consider using its exemptive authority “where necessary and prudent” and invite input from “innovators, investors, and the public alike.” He also identified crypto vaults-on‑chain applications that let users earn passive yield-as an area needing clearer guidance. Atkins compared the current moment to the rise of electronic trading in the late 1990s and pointed to Regulation ATS as a historical example of allowing alternative trading venues to operate without full exchange registration. Industry groups in crypto welcomed the comments. The DeFi Education Fund described the remarks as “powerful.” The Hyperliquid Policy Center said it supported a chairman willing to map on‑chain systems to existing legal frameworks rather than fit new technology into legacy categories. The remarks follow recent SEC staff guidance that indicated DeFi wallet interfaces generally would not be treated as brokers, a view developers interpreted as easing regulatory pressure on decentralized application interfaces and trading front ends. Atkins has also said the agency plans to release a crypto safe harbor proposal for public comment; he told reporters in March that a safe harbor was expected “in the coming weeks,” but the SEC has not provided a firm timeline for proposed rules. The commission’s rulemaking could affect platforms outside the United States because many large exchanges and decentralized protocols rely on U.S. dollar liquidity, American venture capital, institutional counterparties and U.S. banking links. Those connections shape how some overseas platforms design products, limit access and run compliance programs. Other jurisdictions have taken different approaches: the European Union adopted a Markets in Crypto‑Assets framework that splits digital assets into regulatory categories, while Singapore and Dubai have set up licensing systems for trading, custody and token issuance. Congress remains divided over broader federal crypto legislation, including the proposed CLARITY Act, which leaves SEC rulemaking as a likely near‑term path for clearer standards. Background: Over recent years the SEC and the Commodity Futures Trading Commission issued a joint framework that groups digital assets as digital commodities, stablecoins, digital collectibles and digital securities. Under former Chair Gary Gensler, the SEC focused heavily on enforcement actions against token issuers, exchanges and DeFi projects; Atkins’ call for formal rulemaking signals an effort to align existing securities law with the technical design of decentralized platforms.