- Securities and Exchange Commission Chair Paul Atkins has acknowledged that DeFis technological potential can sound like science fiction but that musnt scare regulators
- Officials have begun developing an innovation exemption to allow DeFi platforms to launch without heavy delays
- The Commission has committed to a rules-based approach, moving away from enforcement-led oversight
Securities and Exchange Commission (SEC) Chair Paul Atkins has stated that decentralized finance ( DeFi ) can sound like science fiction, but insisted that regulators must take it seriously. Speaking to developers, lawyers, and advocates at a crypto round table , he outlined a framework for how the agency can accommodate peer-to-peer financial systems without compromising core American values like self-custody. Atkins comments signal a potential shift toward formal rulemaking and innovation-friendly exemptions for blockchain-based platforms.
SEC Working on Innovation Exemption
During the DeFi and the American Spirit round table, Atkins confirmed that SEC staff are working on a formal innovation exemption to allow on-chain platforms and token issuers to operate without waiting months, or years, for regulatory clarity. This technology can sound like science fiction, Atkins said, referring to smart contracts and decentralized applications, but it is being built and used by Americans every day.
Atkins also emphasized that the right to self-custody is a modern expression of long-standing American values, noting, The right to have selfcustody of ones private property is a foundational American value that should not disappear when one logs onto the internet. He used this principle to defend the use of non-custodial wallets and DeFi tools as extensions of individual liberty, adding that many DeFi systems lack administrators altogether, challenging the SECs legacy approach to oversight.
No Regulation by Enforcement
Both Atkins and Commissioner Hester Peirce, who head up the Crypto Task Force, called for regulation by rulemaking, not enforcement. Past SEC warnings to wallet developers and staking providers created confusion, they said, especially since the agency has yet to codify whether such activities fall under securities law. Atkins noted that while staff guidance has stated staking isnt inherently a securities activity, guidance is not law.
Atkins concluded by noting that decentralized systems functioned smoothly during recent market turmoileven as some centralized exchanges collapsed. The SECs evolving position suggests a more constructive regulatory environment for developers working on the frontiers of digital finance.
