SEC Explores Exemption Framework to Foster Crypto Innovation

The U.S. Securities and Exchange Commission (SEC) is reportedly developing an “innovation exemption” framework aimed at stimulating the development of new on-chain products and services. This initiative was highlighted by SEC Chair Paul Atkins, who also criticized the prior administration under former SEC Chair Gary Gensler for its approach to the cryptocurrency sector.

During a recent crypto roundtable titled “DeFi and the American Spirit,” led by the SEC’s crypto task force, Atkins, who previously served as a crypto lobbyist, indicated that he has instructed his staff to consider a conditional exemption relief framework.

Exemptions to Accelerate Innovation

These proposed temporary exemptions would provide relief to companies from specific regulatory requirements. The goal is to encourage innovation in emerging technology sectors, provided these firms adhere to certain conditions.

Atkins stated that this framework would expedite the market introduction of on-chain products and services while the SEC staff simultaneously reviews potential amendments to the Commission’s existing rules and regulations.

“An innovation exemption could contribute to fulfilling President Trump’s objective of establishing America as the global crypto capital by incentivizing developers, entrepreneurs, and other firms prepared to meet specific conditions to innovate with on-chain technologies within the United States,” he remarked.

Concurrently, Atkins has tasked staff with evaluating whether modifications to the commission’s rules and regulations are necessary to accommodate issuers and intermediaries seeking to manage on-chain financial systems.

He noted that “Most current securities rules and regulations are based on the oversight of issuers and intermediaries, such as broker-dealers, advisors, exchanges, and clearing agencies.” He further suggested that “The creators of these rules and regulations likely did not foresee that self-executing software code might supersede such issuers and intermediaries.”

Crypto Regulatory Framework Remains Under Development

The agency’s Crypto Task Force, initiated on January 21 by acting SEC Chair Mark Uyeda, was given the mandate to establish a functional crypto framework for the commission.

In remarks delivered on June 3 to the Senate Appropriations Subcommittee on Financial Services, Atkins disclosed that the SEC plans to refine its crypto policies through a “notice and comment” process, signaling a shift away from shaping rules primarily through judicial action.

He had previously informed lawmakers on May 20 that the Crypto Task Force’s initial report was anticipated within the next few months.

A New Direction at the SEC

During Monday’s crypto roundtable, Atkins also voiced strong criticism of the previous SEC administration under former Chair Gary Gensler regarding its strategy toward cryptocurrency.

Gensler faced considerable scrutiny from the crypto industry for allegedly formulating policy through lawsuits and legal settlements rather than engaging in formal rulemaking.

Since Gensler’s resignation on January 20, the SEC has adopted a noticeably different stance on crypto. This includes the dismissal of several long-standing enforcement actions against cryptocurrency firms.

Furthermore, SEC staff have issued guidance on common crypto staking activities, clarifying that they generally do not contravene securities laws, and have provided information on how federal securities laws might apply to crypto assets.