In a recent address in New York, Securities and Exchange Commission (SEC) Chair Paul Atkins emphasized the agency’s commitment to introducing an “innovation exemption” that would foster development in the digital asset and emerging technology sectors. Atkins expressed hope for the formalization of this exemption by the close of 2025 or at the latest, early 2026, contingent on the resolution of the current U.S. government shutdown, which he noted has significantly hindered the SEC’s regulatory efforts.
During the Futures and Derivatives Law Report event hosted by Katten Muchin Rosenman LLP, Atkins reiterated his stance that innovation within the crypto space remains a top priority for the SEC, describing the agency as increasingly pro-innovation. “Crypto is job one,” he stated, highlighting the need for a regulatory framework that encourages developers to innovate within the United States rather than relocating overseas due to unfavorable regulatory conditions.
Atkins remarked on the historical context of the industry, indicating that the last four years had seen a trend of “repression” in the crypto sector, which has resulted in companies seeking more favorable conditions beyond U.S. borders. He articulated the need for a well-defined regulatory framework that goes beyond previous strategies of regulation by enforcement, advocating for clearer guidelines that would allow innovators to thrive.
The SEC’s aspiration to formalize this innovation exemption is a notable shift from the current reliance on informal guidance and staff interpretations. By establishing explicit rules, the SEC aims to create a stable environment for cryptocurrency and related technology firms. Following his remarks, Atkins shared that his hope is to finalize the exemption soon, making it one of his key objectives for the remainder of the year.
However, the ongoing government shutdown stands as an obstacle, restricting rule-making activities, including those pertinent to cryptocurrencies. While some “essential tasks” can still be addressed, comprehensive rule-making has been postponed until governmental operations resume, leading to uncertain timelines for anticipated regulatory developments.
In the context of legislative progress, Atkins provided an optimistic view of Congress’ initiatives related to the digital asset market, specifically citing the GENIUS Act, which focuses on stablecoin regulations. Although he clarified that the SEC’s role in the bill is limited, he expressed optimism about its implications for market structure and overall regulatory clarity within the crypto space.
As discussions on the GENIUS Act continue, industry stakeholders remain cautiously optimistic about its prospects for passage. Some industry experts, such as Summer Mersinger, CEO of the Blockchain Association, assessed the chance of legislative movement on the bill at just over 50%. Contrasting views emerged during the event, with some analysts expressing skepticism about the bill’s fate before the end of 2025.
The passage of the GENIUS Act marks a significant milestone as the first major federal legislation addressing cryptocurrency and has already prompted initial regulatory measures from the Treasury Department aimed at the stablecoin sector. Commentators within the financial sector foresee a surge of innovations in the wake of these new guidelines, with assertions that widespread applications of stablecoins will quickly follow.
As these developments unfold, the SEC remains committed to fostering a regulatory environment conducive to innovation in the United States, as expressed by Chair Paul Atkins. The overarching goal is to ensure that innovators are encouraged to operate domestically rather than feeling compelled to relocate to jurisdictions that may offer more favorable regulatory conditions.
