SEC Eyes On-Chain Finance, AI-Driven Markets

SEC to Modernize Securities Rules for On-Chain Crypto Markets

U.S. SEC Chair Paul Atkins has signaled a major shift in regulatory approach towards crypto, promising to modernize securities rules and expand "Project Crypto" to integrate markets on-chain. This initiative aims to provide a clearer regulatory framework for tokens, custody solutions, and trading platforms, fostering innovation while maintaining investor protection.

Speaking at the OECD’s Roundtable on Global Financial Markets in Paris, Atkins stated the SEC will move away from primarily enforcement-driven policymaking. He emphasized the need for clear rules, particularly for tokens, outlining a commitment to provide a definitive framework that reduces legal uncertainties for businesses seeking to raise capital on-chain.

Key Takeaways from Atkins' Remarks:

• Clearer Rules for Crypto: The SEC aims to establish bright-line rules for determining which crypto assets fall under its oversight.
• On-Chain Capital Formation: Entrepreneurs should be able to raise capital on-chain without facing excessive legal ambiguity.
• Integrated Platform Framework: The SEC plans to develop a framework for platforms that combine trading, lending, and staking under a single license.
• Updated Custody Rules: Investors and intermediaries will have a variety of custody options available.

Project Crypto: Paving the Way for Tokenized Securities and DeFi

Project Crypto is designed to facilitate the development of tokenized securities, new on-chain asset classes, and decentralized finance (DeFi) applications. Atkins emphasized the importance of fostering innovation within the United States, aiming to make the U.S. a global crypto hub.

Nasdaq President Tal Cohen recently highlighted tokenization as an "extraordinary opportunity" for global markets. Nasdaq has filed with the SEC to enable trading of tokenized securities, demonstrating growing institutional interest in blockchain adoption.

Agentic Finance: AI's Role in Reshaping Markets

Atkins also addressed the potential impact of artificial intelligence (AI) on financial markets. He described the emergence of "agentic finance," where autonomous AI systems could execute trades, allocate capital, and manage risk at speeds exceeding human capabilities. These systems could embed compliance directly into their code, resulting in faster, cheaper, and more accessible markets.

While acknowledging the transformative potential of AI, Atkins cautioned that regulators must establish appropriate safeguards without stifling innovation. He stressed the importance of balancing investor protection with the need to encourage the growth of on-chain capital markets and AI-driven finance within the U.S.

As the crypto landscape evolves, blockchain security becomes increasingly critical. Platforms like Codeum offer services such as smart contract audits and KYC solutions, helping to ensure the integrity and security of on-chain systems.