US Securities and Exchange Commission Chair Paul Atkins disclosed plans to establish an “innovation exemption” that would grant temporary relief from existing securities regulations for digital asset products. The proposal aims to streamline approval processes and enable crypto firms to introduce novel offerings without awaiting full regulatory overhaul.
Atkins made the announcement during a Fox Business interview, indicating that formal rulemaking would commence in the coming months. The exemption is intended as a bridge mechanism, permitting the rollout of digital asset exchange-traded products, tokenization platforms and other blockchain-based innovation under a limited safe harbor, while comprehensive, crypto-specific regulations are drafted.
The initiative follows recent SEC actions to ease ETF listing standards under Rule 6c-11 and the launch of Project Crypto, a broader effort to modernize securities rules for on-chain markets. Atkins asserted that the innovation exemption would provide legal certainty to market participants and foster competition, without compromising investor protection objectives.
Industry stakeholders have welcomed the proposed carve-out as a necessary interim step to align regulatory frameworks with rapid technological change. Critics caution that exemptions must include clear eligibility criteria and sunset provisions to prevent regulatory gaps. The SEC expects to release detailed proposals before the end of the calendar year.
The push for an innovation exemption reflects a shift from ad hoc enforcement to rulemaking that accommodates decentralized finance (DeFi) and tokenized asset classes. If adopted, the exemption could catalyze new product launches, enhance capital formation and solidify the US role in global digital asset markets, pending final SEC approval.
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