The SEC looks at a 1990s fix for crypto markets to allow true “innovation pathway”
In a May 8 speech, SEC Chair Paul Atkins said the agency could consider a limited “innovation pathway” for on-chain trading systems in the near future. Meanwhile, the agency will reserve formal notice-and-comment rulemaking to determine how crypto platforms fit inside the exchange definition. Atkins
SEC Chair Paul Atkins announced on May 8 that the agency is exploring a limited "innovation pathway" for on-chain trading systems, drawing parallels to regulatory approaches used in the 1990s. Speaking at a public event, Atkins indicated the SEC would pursue formal notice-and-comment rulemaking to clarify how cryptocurrency platforms fit within existing exchange definitions, while considering special accommodations for blockchain-based trading infrastructure.
The regulatory framework Atkins referenced stems from the SEC's handling of electronic trading systems during the 1990s internet boom, when traditional market structures faced disruption from digital platforms. During that period, the commission developed alternative compliance pathways that allowed innovative trading technologies to operate under modified regulatory requirements while maintaining investor protections. This precedent suggests the SEC may create similar carve-outs for decentralized finance protocols and on-chain trading venues.
The announcement signals a potential shift toward more accommodating crypto regulation under the new administration. Industry participants have long sought clarity on how decentralized exchanges and automated market makers should comply with securities laws designed for traditional centralized platforms. An innovation pathway could provide regulatory certainty while allowing continued development of blockchain-based financial infrastructure, potentially reducing compliance costs and legal uncertainty for crypto platforms.
Market observers will monitor the SEC's rulemaking timeline and specific criteria for qualifying platforms. The agency's approach to defining "innovation pathway" eligibility and required investor protections will likely shape the competitive landscape for both centralized and decentralized crypto exchanges.
Source: CryptoSlate
