SEC Chairman Urges Clear Rules for On-Chain Trading

In a speech delivered at the Special Competitive Studies Project’s AI+ Expo, Atkins said today’s software applications do not always organize themselves in ways that adhere to the regulated market functions identified in the SEC’s existing framework.

For that reason, Atkins said, the SEC should provide greater clarity by providing market participants with a clear sense of how on-chain trading systems can operate within the regulatory perimeter; considering the application of the broker and dealer definitions and the associated regulatory framework to these activities; confirming which general-purpose activities fall outside the scope of the definition of “clearing agency” when it comes to on-chain clearing and settlement; and providing clarity surrounding crypto vaults.

“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. “We should clarify how the Commission views the spectrum of models that may implicate our statutes through notice and comment rulemaking, using our exemptive authorities where necessary and prudent, all with full participation from innovators, investors and the public alike.”

Atkins added that the SEC should continue to coordinate with other regulators to avoid a patchwork of regulation.

He also repeated a call he has made in the past for Congress to pass the CLARITY Act.

“Because, 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,” Atkins said.

The CLARITY Act, which is a crypto bill that has been stalled in Congress, regained some momentum on May 1 when lawmakers reached a compromise on stablecoin yield and rewards.

The lawmakers’ compromise would adjust the legislation to restrict crypto companies from paying interest or yield to users on passive stablecoin deposits but would allow them to offer rewards tied to activity such as trading, transactions or staking.

In another recent move, the SEC and the Commodity Futures Trading Commission (CFTC) each issued guidance that they said provided greater clarity about their respective rules around crypto assets.