SEC Chair Paul Atkins Proposes “Innovation Exemption” to Boost Onchain Development

This proposal aims to provide conditional regulatory relief for blockchain firms, encouraging responsible development while maintaining investor protection and market integrity.

source: inc.com

During the SEC’s fifth Crypto Task Force roundtable, themed “DeFi and the American Spirit,” Atkins outlined the framework for the proposed exemption. The exemption would grant temporary relief from certain regulatory requirements to companies that meet specified conditions while building blockchain-based systems. Atkins emphasized that these measures are designed to support innovation without compromising the core principles of securities regulation.

Atkins highlighted the resilience of onchain, self-executing software systems, especially during recent market crises, contrasting their performance with the failures of some centralized platforms.

“Many on-chain systems continued to operate as designed pursuant to open-source code,”

he noted, suggesting that current regulations, built around traditional intermediaries like broker-dealers and exchanges, may not be suitable for decentralized models.

Atkins has directed SEC staff to assess whether further guidance or rule changes are necessary to help market participants comply with securities laws when interacting with self-executing software. He acknowledged that the original drafters of securities regulations likely did not foresee the rise of decentralized, code-driven financial systems, underscoring the need for regulatory flexibility.

Appointed earlier this year as part of President Trump’s initiative to position the U.S. as a leader in crypto innovation, Atkins is moving the SEC toward a more inclusive and participatory approach. This marks a departure from previous leadership, focusing on rulemaking that accounts for the unique characteristics of blockchain and crypto assets.

The SEC’s Crypto Task Force, led by Commissioner Hester Peirce, is expected to release its first policy report in the coming months. This report will help lay the groundwork for a regulatory framework that supports the growth of onchain technologies and brings much-needed clarity to the crypto industry.

 

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