U.S. SEC Chairman: We are planning an "innovation exemption" for DeFi protocols and should not be punished for malicious use by others

U.S. SEC Chairman Paul Atkins revealed that he is studying the "innovation exemption" for DeFi, reflecting the Trump administration's changing attitude towards cryptocurrency regulation.
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U.S. Securities and Exchange Commission (SEC) Chairman Paul Atkins revealed on June 9, 2025 that the SEC is actively studying decentralized finance (DeFi) The platform provides an "innovation exemption", which aims to lower regulatory barriers and provide convenience for developers.

SEC proposes “innovation exemption” to simplify DeFi development

At the SEC’s fifth cryptocurrency roundtable, Chairman Atkins clearly pointed out that studying DeFi’s “innovation exemption” is to simplify the development path. He has instructed staff to study amending the rules to "provide the necessary convenience for issuers and intermediaries seeking to manage on-chain financial systems."

This potential exemption is called an "innovation exemption" by Atkins and is expected to allow covered entities

to "quickly" bring on-chain products and services to market.

This is very different from former Chairman Gary Gensler’s attitude of emphasizing enforcement, and shows that the SEC’s regulatory model is shifting from enforcement priority to rule formulation and cooperation. Atkins said of the innovation potential of blockchain, “We shouldn’t automatically be afraid of the future.”

Regulatory thinking shifts: focus on developer responsibility and innovation

SEC Chairman Paul Atkins and Commissioner Hester Peirce both believe that developers should not be blamed just because others use code (DeFi tools) developed by someone. This move may involve the right to free speech under the First Amendment of the U.S. Constitution. Commissioner Peirce stated:

"The SEC should not infringe on the First Amendment rights by regulating someone simply because they publish code and others use that code to conduct activities that the SEC has traditionally regulated."

If implemented, the "Innovation Exemption" is expected to help accelerate the development of on-chain financial products, provide legal clarity, and solidify the United States' leading position in crypto innovation. However, challenges remain, and the SEC needs to effectively distinguish between genuine and fake decentralized projects. Commissioner Peirce warned:

Centralized entities cannot escape regulation simply by labeling them “decentralized.”