Blockchain may be new, but the financial system problems it aims to solve aren’t. The 1960s “Paperwork Crisis” pushed regulators to modernize markets through electronic trading and coordinated clearing systems. Today, blockchain is positioned as the next major upgrade – offering a shared, tamper-resistant ledger that could streamline trading, settlement, and recordkeeping across the industry.

But with innovation comes regulatory friction. Depending on how a blockchain platform operates, it may need to register as an exchange, ATS, broker-dealer, clearing agency, or transfer agent. The SEC and CFTC are actively assessing how to fit decentralized technology into rules written for centralized systems. The big takeaway: blockchain’s potential is enormous, but widespread adoption hinges on clarity around when these systems cross into regulated activity.

To read the full Chapter 9 in the Handbook of Blockchain, Digital Finance, and Inclusion, please click here.