What happened
Speaking on May 8, SEC Chair Paul Atkins said the agency is weighing a limited 'innovation pathway' that would let on-chain trading systems operate under tailored conditions while the Commission works through the broader question of how crypto venues fit the Exchange Act definition of an exchange. Per CryptoSlate, which first surfaced the speech, Atkins drew an explicit line to the late-1990s moment when the SEC adopted Regulation ATS to give electronic communication networks like Island and Instinet a workable path.
Atkins framed the parallel as deliberate. Electronic order books were a new market structure then. On-chain order books, automated market makers, and tokenized settlement venues are the new market structure now.
The Chair was careful to separate two tracks. The pathway would be a near-term, narrower accommodation. The exchange-definition question gets formal notice and comment, the slow track that produces durable rules.
Why it matters
This is the first concrete hint from Atkins about the mechanism the SEC will use to bring on-chain venues inside the regulatory tent without waiting on Congress. The market-structure bills that moved through the House in 2024 and 2025 still face a Senate that has not produced a companion text the White House would sign. An administrative pathway built on Regulation ATS precedent does not need that.
It needs a Commission vote and a Division of Trading and Markets willing to issue staff guidance. The 1998 analogy carries weight because it worked. ECNs got a defined regulatory status, capital flowed in, and the venues either grew into national exchanges, like what became Nasdaq's INET, or stayed as ATSs.