Drawing overseas DeFi builders back to the U.S. will support the development of a stronger, compliant, and competitive DeFi ecosystem.

Today, we’re diving into a topic that’s electrifying the crypto community: the U.S. Securities and Exchange Commission (SEC) has changed its previously stringent stance on decentralized finance (DeFi). At the “DeFi and the American Spirit” roundtable on June 9 (UTC), the SEC, for the first time, announced it is developing an innovation exemption specifically for DeFi. The market responded emphatically, with several DeFi tokens surging on the news.

As a Web3 attorney, I have witnessed countless projects collapse due to regulatory uncertainty. Does this signal mark a true turning point for the DeFi ecosystem?

1. SEC Chair: DeFi Reflects Core American Values

SEC Chair Paul Atkins stated unequivocally at the event: “The core principles of DeFi are closely aligned with America’s foundational values, such as economic freedom and private property rights.” Atkins supported self-custody of digital assets and acknowledged blockchain’s critical role in enabling financial transactions without intermediaries. The “innovation exemption” he described effectively creates a fast track for DeFi projects—enabling compliant projects to enter the market and launch operations more rapidly, provided they meet baseline regulatory standards. Significantly, on September 5, the SEC and Commodity Futures Trading Commission (CFTC) issued a joint statement calling for regulatory coordination. This shift from fragmented oversight to agency collaboration marks a major transformation in the regulatory landscape for crypto.

2. What Does This Mean for DeFi?

As an attorney, my focus is always on the “compliance boundary.” These promising signals highlight a fundamental shift in U.S. crypto regulation: DeFi is no longer a regulatory gray area.

First, this regulatory shift is a clear benefit for innovators. The innovation exemption would allow truly decentralized platforms to bypass securities registration, sidestep complex disclosures and audits, and dramatically lower barriers to entry. This strengthened position could spur more institutional investment in DeFi. For developers and teams in China, it also opens new opportunities for U.S.–China cross-border collaboration. Regulatory relaxation will catalyze structural change throughout DeFi.

Second, stronger investor protections will boost market confidence. Between April and June 2025 (UTC), the SEC Crypto Asset Working Group hosted four public roundtables on topics including crypto trading, custody, tokenization, and DeFi. Led by Commissioner Hester Peirce, these forums—open to the public—were described as an urgent push for crypto clarity, reflecting the SEC’s move from adversarial postures to greater cooperation. The SEC’s focus on high-quality regulation is a protective measure for DeFi users, helping to mitigate risk of rug pulls. Atkins reiterated the right of individuals to manage private property and openly supported participation via wallet-based, on-chain transactions, underscoring that DeFi projects are not securities and merit their own space in the financial ecosystem. To borrow an aviation metaphor, DeFi projects have often been like planes navigating without established routes—some successfully taking off and finding their flight paths, others remaining in a holding pattern. Coordinated SEC and CFTC regulation is like establishing air routes and building airports—planes may land at different airports, but they will remain on course. That said, the details of the exemption are still being finalized and challenges remain, so prudent caution is warranted for all project teams.

Third, the policy makes clear that software developers should not be scapegoated for misuse and helps clearly define legal boundaries. Atkins drew an analogy to autonomous car engineers. He stated developers should not shoulder liability for how others deploy their code, thereby shifting responsibility from code creators to users. Those building self-custody or privacy tools should not be held accountable simply because their software may be used for illicit purposes. Commissioner Peirce agreed, stressing that code publication is distinct from financial conduct. However, she cautioned, centralized organizations cannot hide behind the “decentralized” label to evade oversight. The SEC appears to be embracing a technology-neutral regulatory approach.

Finally, increased clarity on staking and mining regulations eases compliance concerns. The SEC’s Division of Corporation Finance has confirmed that proof-of-work (PoW) mining and proof-of-stake (PoS) staking do not constitute securities transactions in themselves. This clear stance alleviated anxiety among projects, miners, and validators. The market responded with notable gains in many projects focused on staking, signaling renewed institutional confidence in staking ecosystems.

3. Politics and Markets: The Twin Drivers Behind Reform

These developments are no coincidence. SEC Republican commissioners have consistently pushed for pro-crypto reforms, and Commissioner Peirce’s “safe harbor” proposal is gaining traction in Congress. The market has responded enthusiastically, viewing these moves as a pivot away from punitive, enforcement-driven policies, toward open dialogue and structural, inclusive regulation.

4. If Adopted: A New Dawn for U.S. DeFi

If the innovation exemption is implemented, the U.S. DeFi industry will finally move beyond regulatory ambiguity, enabling teams to advance technology and business models within a well-defined legal framework. This wouldn’t just benefit domestic projects, but would also entice global DeFi builders to return to the U.S., helping to establish a stronger, more compliant, and competitive decentralized finance ecosystem.

Support from Republican SEC commissioners signals regulators’ intent to understand DeFi’s essence and adapt legal frameworks accordingly. For the wider crypto sector, this shift represents more than a regulatory pivot; it could redefine innovation, responsibility, and freedom. After years of breakneck DeFi growth and regulatory uncertainty, the SEC’s latest reforms offer new hope for convergence with traditional finance and sustainable industry maturity.

Statement:

1. This article is reprinted from [TechFlow]. Copyright remains with the original author [Attorney Pang Meimei]. For reprint concerns, please contact the Gate Learn team, who will respond according to relevant procedures.
2. Disclaimer: The views and opinions expressed in this article are solely those of the author and do not constitute investment advice.
3. Other language versions are translated by the Gate Learn team. Unless Gate is explicitly cited, translated articles may not be copied, distributed, or plagiarized.