SEC Weighs Regulatory Framework for Onchain Trading and AI-Driven Finance

The Securities and Exchange Commission (SEC) is taking a closer look at how existing securities laws apply to emerging technologies such as onchain trading systems, artificial intelligence-driven financial infrastructure, and blockchain-based applications. The review aims to provide clarity on the regulatory framework for these innovative financial instruments.

According to SEC Chair Paul Atkins, many current regulations were built around traditional financial intermediaries like brokers, exchanges, and clearing agencies. However, with the rise of blockchain protocols that combine multiple functions into a single system, there is a need to re-examine existing laws and potentially introduce new rules or guidance.

Atkins highlighted four areas currently under review: onchain trading systems, broker and dealer definitions, clearing and settlement models, and blockchain-based 'crypto vaults' that allow users to earn passive yield through automated strategies. He emphasized the importance of clarifying how securities laws apply across different blockchain market structures, including notice-and-comment rulemaking and exemptive authorities.