Securities Regulation Daily Wrap Up, SEC NEWS AND SPEECHES—Atkins calls for greater regulatory clarity for onchain trading systems, (May 11, 2026)

By Suzanne Cosgrove

Rulemaking may be needed, he said, as software applications do not organize themselves neatly along existing categorical lines.

The SEC’s posture toward innovation “carries outsized consequences,” not just for the financial markets but for the firms that it directly regulates, SEC Chairman Paul Atkins told an industry group on Friday.

“At its best, the Commission can meet innovation with thoughtfulness,” Atkins said, but he acknowledged that market participants should have a clear sense of how onchain trading systems can operate within the SEC’s regulatory perimeter.

The Commission’s tools include everything from innovation-friendly exemptions to outright prohibitions that can either foster or halt the adoption of new technologies, Atkins noted in an address to the Special Competitive Studies Project AI+ Expo (SCSP).

Agentic finance. Given the unique scale at which it operates, the tendency to treat AI as an unprecedented invention requiring an entirely new regulatory regime is “understandable but erroneous,” Atkins said. “The pace of innovation is new. But the animating force behind it is not,” he said.

Unique to AI, however, is the scale at which it operates. Machines now have the capacity to assist in decision-making at an exponential scope and speed that is reshaping industries across our economy. Firms can process vast quantities of information faster and identify patterns with more precision than ever before.

Firms can manage risk through methods that many considered impossible only a few years ago, but the features that can create value also have the potential to introduce new vulnerabilities, he noted. “If models are opaque, it becomes harder to understand how decisions are reached and by whom.”

However rapidly the technological landscape may change, the agency’s foundational principles do not, Atkins said. “That means that firms remain responsible for the outcomes of the tools that they deploy and for informing investors of how those tools are used.

“For our part at the SEC, we will not dictate which models firms must use, nor will we cement today’s technology as the standard for tomorrow. Past regulatory postures teach us that such an approach would age poorly—and would almost certainly miss the mark,” he said.

“Our job is to set the rules of play and referee the game, not to pick the winning team,” he said.

Setting rules for onchain. Expanding on a rulemaking theme, Atkins noted the SEC currently identifies regulated market functions through distinct categories, including broker-dealers, exchanges, clearing agencies and transfer agents.

“But software applications today do not always organize themselves neatly along these categorical lines,” he said. “A single protocol can execute a trade, manage collateral, route liquidity, execute trading strategies through vault structures, and settle the transaction—all within a unified, automated system, often within seconds.”

Given that expansion, the Commission needs to provide greater clarity as to how those principles apply to onchain markets, Atkins said. He outlined the following initiatives:

• The Commission should consider what a future-proofed framework may look like—that exercise would take the form of notice and comment rulemaking and would address the “exchange” definition as applied to onchain trading systems, he said.

• The SEC should further consider the application of the broker and dealer definitions and their associated regulatory framework, including by addressing issues raised in a recent staff statement on software interfaces. Policy initiatives may involve notice and comment on exemptive rulemaking as well, he said.

• Rulemaking should be considered to address the definition of “clearing agency” with respect to persons facilitating onchain clearing and settlement, specifically to confirm which general-purpose activities fall outside its scope. When settlement is near instantaneous and counterparty risk is managed algorithmically, the traditional clearing agency model requires fresh analysis.

• Finally, Atkins said the SEC should consider ways to provide clarity surrounding what are referred to as “crypto vaults,” particularly regarding Securities Act and Advisers Act touchpoints. Crypto vaults are onchain software applications that often allow users to earn yield passively through deploying assets into yield-generating opportunities onchain.

Correcting the course. In a second speech delivered Friday to the Conference on Financial Market Regulation, Atkins returned to a more common theme – that the SEC’s enforcement program had drifted from its “missional anchor” in recent years and had begun wielding enforcement “more like a sledgehammer than a scalpel.”

”Over the past year, however, we have recalibrated that approach,” he said. “We have empowered the talented, hardworking enforcement staff to pursue cases that provide meaningful investor protection and strengthen market integrity.

At the crux of the course correction is methodical economic analysis, Atkins told the group. “By looking through the lens of economic evidence, we can assess a corporation’s benefit from a violation of the federal securities laws and ensure that the penalties are proportionate to the conduct.

“In short, just as the Commission evaluates proposed rules through rigorous economic inquiry, often drawing on the data that researchers in this room provide, so too must our enforcement work be grounded in—and commensurate with—the economic evidence at hand,” Atkins said.

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