The U.S. Securities and Exchange Commission is considering updates to rules for on-chain financial markets and has said it needs to clarify how to apply existing regulatory frameworks to software applications.

The Block reported on May 8 that SEC Chair Paul Atkins said it is necessary to take another look at definitions for exchanges, clearing agencies and brokers to fit on-chain trading systems.

Atkins, speaking at an event, said software applications do not fit neatly into existing regulatory categories such as clearing agencies, brokers and exchanges. He said the SEC should review its rulemaking process, including public comment, to re-examine definitions related to exchanges, clearing agencies and brokers that apply to on-chain trading systems. He also said clearer standards are needed for crypto vaults, on-chain software that can generate passive returns for users.

The comments show the SEC has become more friendly toward cryptocurrencies than it was under former Chair Gary Gensler, The Block reported. Since taking office, Atkins has proposed an innovation exemption plan for tokenised securities and led the release of a classification system to distinguish which digital assets could qualify as securities.