SEC Chair Paul Atkins has signaled the agency is preparing formal rulemaking to clarify how its regulatory framework applies to onchain market structures and software applications. The statement addresses a persistent gap in U.S. crypto regulation: the absence of clear guidance on SEC jurisdiction over decentralized systems and blockchain-based infrastructure. Atkins stated the SEC needs to “clear up how its regulatory framework applies to software applications,” marking a shift toward proactive rule-drafting rather than enforcement-led interpretation.
The Regulatory Clarity Gap
The SEC currently operates without explicit guidance on how securities laws apply to decentralized onchain systems. Market participants, developers, and exchanges have operated in ambiguity for years, with compliance determined largely through enforcement actions and no-action letters rather than formal rules. Atkins’ statement indicates the agency recognizes this creates friction for legitimate innovation while leaving bad actors without clear boundaries. The proposed rulemaking would formally address which SEC regulations apply to onchain market structures, software applications, and related infrastructure. This approach differs from the agency’s historical pattern of clarifying jurisdiction through litigation and regulatory guidance documents.
What Formal Rulemaking Could Cover
The scope of potential SEC rulemaking remains undefined. It could address exchange registration requirements for decentralized platforms, custody standards for onchain assets, disclosure obligations for blockchain-based securities offerings, or compliance frameworks for software developers. The SEC has jurisdiction over securities exchanges, broker-dealers, and clearing agencies—all categories that could theoretically encompass onchain infrastructure depending on how rules are written. The timing of Atkins’ statement suggests the agency views this as urgent, though specific timelines for drafting and public comment periods have not been announced. Industry participation in the rulemaking process will likely prove critical to determining which existing regulatory categories map to decentralized systems.
Market Structure Regulation at an Inflection
Atkins’ commitment to formal rulemaking signals a potential shift in SEC approach to crypto infrastructure. Rather than case-by-case enforcement, the agency appears open to creating prescriptive rules that would give developers and platforms a clearer path to compliance. This aligns with broader regulatory trends toward codifying digital asset standards. The move could reduce litigation risk for compliant projects while establishing firmer guardrails for the industry. However, the rulemaking process typically spans months to years, meaning near-term ambiguity will persist. Market participants will monitor the SEC’s notice of proposed rulemaking closely for clues on jurisdiction scope and compliance requirements.
Next Steps Remain Unclear
Atkins has not disclosed a timeline for rulemaking or which specific regulations require clarification. The agency has not announced formal stakeholder engagement or comment periods. Crypto industry groups and market infrastructure providers will likely petition for early involvement in the drafting process. The question of whether rulemaking applies equally to decentralized exchanges, protocols, and traditional market intermediaries entering the onchain space remains unresolved and will shape competitive dynamics significantly.
