SEC Chairman: Formal rules will be developed for on-chain protocols and exemptions will be provided as much as possible

At the agency's fifth cryptocurrency roundtable on June 9, SEC (SEC) Chairman Paul Atkins urged the commission to develop regulations that rely on congressional mandates rather than the opinions of informal staff. He argues that forcing intermediaries incurs costs and limits on-chain functions such as staking.

Atkins criticized the previous regulatory actions that labeled wallet developers as unregistered intermediaries, stating that the mere release of software should not trigger securities obligations. He emphasized that many blockchain applications operate without administrators, which removes them from the framework written for issuer-centric markets.

He requested the staff to study how registrants can interact with the automated execution code while meeting information disclosure and custody requirements, and also support amendments that allow intermediaries to migrate settlement and clearing to the blockchain in order to reduce friction and enhance liquidity.

To expedite the experiments, Atkins instructed the staff to design an "innovation exemption" for companies launching on-chain products.

He insists that establishing a lasting policy must be achieved through notice and comment rules, rather than through temporary statements or litigation.

He added that some centralized platforms have failed amid recent market pressures, while resilient on-chain protocols continue to process transactions.

Atkins concluded that the committee will seek to establish formal rules and exemptions wherever possible, in order to incorporate self-custody and decentralized finance (DeFi) into the securities framework without compromising long-term investor protection measures.

Source: CryptoSlate