U.S. Securities and Exchange Commission chair signals limited innovation pathway and future rulemaking for onchain markets

In remarks at the SCSP Expo, the Chair of the U.S. Securities and Exchange Commission, speaking in his personal capacity, signaled that the Commission may soon consider a limited innovation pathway for onchain trading systems and that it should use notice-and-comment rulemaking to clarify how existing securities law categories apply to onchain market structures. He said software-based market infrastructure does not always fit neatly within traditional categories such as exchanges, brokers or dealers, clearing agencies, and transfer agents. On artificial intelligence, he said firms remain responsible for the outcomes of the tools they deploy and for informing investors how those tools are used, while the regulator should avoid prescribing specific models. The speech identified four areas for potential policy work. These were the application of the exchange definition to onchain trading systems, the broker and dealer definitions including issues raised in the recent staff statement on certain software interfaces, the clearing agency definition for persons facilitating onchain clearing and settlement including confirmation of which general-purpose activities fall outside scope, and clarification for so-called crypto vaults, particularly under the Securities Act and Advisers Act. He said some of this work could involve notice-and-comment exemptive rulemaking. He also pointed to recent staff statements, frequently asked questions, and no-action letters on blockchain as examples of efforts to reduce legal uncertainty and identify paths to compliance. He said the SEC should continue engaging with investors, market participants, and other regulators as these issues often cross jurisdictional lines, and he renewed his call for Congress to pass the CLARITY Act. In his account, statutory changes would provide a more durable framework alongside any future Commission rulemaking.