“DeFi aligns with America's core values.”
Written by: Lawyer Pang Meimei
“Once the ‘innovation exemption’ moves from concept to implementation, the U.S. DeFi ecosystem may be able to escape some of the current regulatory gray areas, allowing projects to advance technological implementation and business model exploration within a clearer legal framework. This not only aids the development of domestic projects but may also attract overseas DeFi builders back to the U.S. market, creating a healthier, compliant, and competitive decentralized finance landscape.”
Today, we discuss an exciting topic for the entire crypto community: the U.S. Securities and Exchange Commission (SEC) has changed its previously strict stance on the decentralized finance (DeFi) sector. During the “DeFi and the American Spirit” crypto roundtable held on June 9, it was announced for the first time that the SEC is researching and formulating an innovation exemption mechanism for DeFi. This development has quickly sparked a strong market reaction, with several DeFi tokens rising in response.
As a web3 lawyer, I have seen too many projects fail due to regulatory uncertainty. Can this signal truly bring substantial breakthroughs for the DeFi ecosystem?
1. SEC Chairman's Statement: DeFi Aligns with America's Core Values
SEC Chairman Paul Atkins clearly stated during the meeting that “the fundamental principles of DeFi are highly aligned with America’s core values such as economic freedom and private property rights.” He particularly emphasized support for the self-custody model of crypto assets and recognized the important role of blockchain technology in facilitating financial transactions without intermediaries. The “innovation exemption” policy revealed by Atkins can be seen as a green light for DeFi, as it means that eligible DeFi projects may be able to enter the market and conduct business attempts more quickly under this framework, provided they meet basic regulatory requirements. More importantly, on September 5, the SEC and the Commodity Futures Trading Commission (CFTC) jointly issued a statement calling for regulatory coordination, marking a shift from “acting independently” to “collaborative efforts” between the two regulatory bodies, which can be seen as a significant change for crypto.
2. What Does This Mean for the DeFi Industry?
As a lawyer, I am most concerned about the “compliance boundaries.” These positive signals fundamentally mark a shift in the logic of U.S. crypto regulation, indicating that DeFi is no longer a “gray area” for regulation.
First, the change in regulatory attitude is obviously beneficial for entrepreneurs. The “innovation exemption” policy means that truly decentralized platforms may be exempt from registering as securities, avoiding cumbersome disclosure and audit requirements, thus lowering the entry barrier and attracting more institutional funds into the DeFi ecosystem. For our Chinese project teams or developers, this also means that there will be more opportunities for cross-border cooperation between China and the U.S. The loosening of regulations is undoubtedly a catalyst for structural changes in DeFi.
Second, it strengthens investor protection and increases market confidence. From April to June 2025, the SEC’s cryptocurrency working group held four public roundtable meetings covering topics such as crypto trading, custody, asset tokenization, and DeFi. These discussions were organized by the SEC’s crypto task force and were open to the public. SEC Commissioner Hester Peirce believes they represent a “spring sprint towards crypto clarity,” marking a shift from confrontation to cooperation. The “high-quality regulation” emphasized by the SEC serves as a form of investment protection for DeFi users, reducing rug pull risks. Atkins reiterated the “right to self-manage private property,” clearly supporting users participating in on-chain financial activities through personal wallets, effectively signaling that DeFi is not a security and should have its own ecological niche. We can liken finance to an airplane; in the past few years, DeFi has easily “lost its direction” due to the lack of flight paths. Some DeFi projects have successfully taken off and entered the flight path, while others are still circling in the air, neither daring to land nor to continue forward. The coordinated regulation by the SEC and CFTC is more like drawing flight paths and building airports for DeFi; although planes may land at different airports, they will at least not fly off course. Of course, the details of the exemption policy have yet to be finalized, and challenges still exist. Before that, Lawyer Pang Meimei still advises project teams to maintain a cautious attitude.
Furthermore, the statement clarifies that code publishers should not be held liable, delineating developers' legal responsibilities. Atkins used the analogy of autonomous vehicle developers, stating that “code publishers should not be held responsible for the actions of others using their code,” clearly shifting the responsibility from tool developers to users. Especially for those developing self-custody tools or privacy-enhancing software, they should not be held accountable simply because others use their code for illegal activities. SEC Commissioner and head of the crypto task force Hester Peirce echoed this view, emphasizing that code publishing and financial behavior should be treated differently. However, she also reminded that centralized entities should not use the “decentralized” label to evade regulation, indicating that the SEC recognizes the principle of “technological neutrality.”
Finally, the regulation of staking mining is clearer, alleviating compliance anxiety for participants. The SEC’s Division of Corporation Finance previously clarified in a guidance document that proof-of-work (PoW) mining and proof-of-stake (PoS) staking do not, in themselves, constitute securities transactions. This clarification greatly alleviated the compliance anxiety of many blockchain projects and participants such as miners and validators. The market's reaction was also evident, with many staking projects rising simultaneously, reflecting institutional confidence in the staking ecosystem.
3. Behind the Policy: Dual Push from Politics and the Market
This series of developments is not coincidental. In recent years, Republican commissioners within the SEC have continuously pushed for the formulation of more crypto-friendly policies, and proposals like the “safe harbor” advocated by Hester Peirce have been increasingly accepted by more legislators. The market has responded very positively, interpreting this as a sign that the U.S. may no longer attempt to suppress DeFi innovation through “enforcement regulation,” but rather shift towards a more dialogic and structurally inclusive regulation.
4. If Realized: U.S. DeFi May Welcome a New Starting Point
Once the “innovation exemption” moves from concept to implementation, the U.S. DeFi ecosystem may be able to escape some of the current regulatory gray areas, allowing projects to advance technological implementation and business model exploration within a clearer legal framework. This not only aids the development of domestic projects but may also attract overseas DeFi builders back to the U.S. market, creating a healthier, compliant, and competitive decentralized finance landscape.
The push for more crypto-friendly policies by Republican commissioners in the SEC indicates that regulatory agencies are genuinely trying to understand the essence of DeFi and are willing to make corresponding adjustments at the legal level. For the entire industry, this is not only a shift in regulatory attitude but may also represent a redefinition of innovation, responsibility, and freedom. From the wild growth of DeFi in 2020, through the regulatory vacuum, to now the SEC adjusting the regulatory framework to legitimize DeFi, this initiative gives us confidence in the perfect integration of DeFi with traditional finance.
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