The SEC has released positive signals regarding DeFi regulation. What does it mean for the encryption industry?

Author: Lawyer Pang Meimei

Today, let's talk about a topic that has excited 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 that they are researching and formulating an innovation exemption mechanism for DeFi. This development quickly sparked a strong market reaction, with multiple 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 a substantial breakthrough for the DeFi ecosystem?

**SEC Chairman's Statement: DeFi Aligns with American Core Values

SEC Chairman Paul Atkins clearly pointed out at the meeting that "the fundamental principles of DeFi align closely with core values such as economic freedom and private property rights in the United States." He particularly emphasized support for the self-custody model of crypto assets and recognized the important role of blockchain technology in enabling financial transactions without intermediaries. The "innovation exemption" policy revealed by Atkins can be seen as a green channel for DeFi, as it means that qualifying DeFi projects will have the potential to enter the market and conduct business trials more quickly, provided they meet basic regulatory requirements. More importantly, on September 5th, the SEC and the Commodity Futures Trading Commission (CFTC) jointly issued a statement calling for regulatory coordination. This move marks a shift of the two regulatory agencies from "acting independently" to "collaborating together," which can be described as a significant transformation in the crypto space.

What does this mean for the DeFi industry?

As a lawyer, what I care most about is the "compliance boundary". The core of these positive signals marks a fundamental shift in the U.S. crypto regulatory logic, and DeFi is no longer a "gray area" of regulation.

Firstly, the shift 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 auditing requirements, thus lowering the entry threshold and attracting more institutional capital into the DeFi ecosystem. For our Chinese projects or developers, it also means that there will be more opportunities for cross-border cooperation between China and the United States in the future, and the relaxation of regulations is undoubtedly a catalyst for structural changes in DeFi.

Secondly, strengthen investor protection and increase market confidence. From April to June 2025, the SEC's cryptocurrency working group held four public roundtable meetings, covering topics such as cryptocurrency 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 are a "spring sprint towards clarity in crypto" and mark a shift from confrontation to cooperation. The SEC emphasizes that "high-quality regulation" serves as investment protection for DeFi users, reducing rug pull risks. Atkins reiterated the "self-management rights of private property," clearly supporting users' direct participation in on-chain financial activities through personal wallets, which effectively signals that DeFi is not a security and should have its own ecological niche. We compare finance to an airplane; in the past few years, DeFi has easily "lost direction" without flight paths. Some DeFi projects successfully took off and entered the airways due to a strong sense of direction, while others are still circling in the air, neither daring to land nor to continue moving forward. The coordinated regulation between the SEC and CFTC is more like drawing flight paths and constructing airports for DeFi; although planes may land at different airports, they at least won’t fly off course. Of course, the details of the exemption policies have yet to be implemented, and challenges still exist. Before this, lawyer Pang Meimei still advises project parties to maintain a cautious attitude.

Furthermore, it is stated that code publishers should not be held "liable," clarifying the legal responsibilities of developers. Atkins uses the analogy of autonomous vehicle developers, proposing that "code publishers should not be held accountable for others' use of their code," explicitly shifting the responsibility from tool developers to users. Especially for developers who create 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 activities should be treated differently. However, she also cautioned that centralized entities should not use the "decentralization" label to evade regulation, and it is clear from her remarks that the SEC recognizes the principle of "technological neutrality."

Finally, the regulation of staking mining is clearer, alleviating the compliance anxiety of participants. The SEC's Division of Corporation Finance previously stated in a guidance that proof of work (PoW) mining and proof of stake (PoS) staking do not, in themselves, constitute securities transactions. This clarification has greatly alleviated the compliance anxiety of numerous blockchain projects and miners, as well as validator participants. The market's reaction is also evident, with many staking projects rising simultaneously, demonstrating institutional confidence in the staking ecosystem.

Behind the Policy: The Dual Drive of Politics and Market

This series of movements is not coincidental. In recent years, Republican commissioners in the SEC have consistently pushed for more crypto-friendly policies, and the "safe harbor" proposal advocated by people like Hester Peirce for many years is also being accepted by more legislators. The market has reacted very positively to this, interpreting it as a sign that the U.S. may no longer attempt to suppress DeFi innovation through "enforcement regulation," but instead shift towards a more dialogic and structurally inclusive regulation.

If it becomes a reality: the US DeFi may迎来 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. Project teams can advance technological implementation and explore business models within a clearer legal framework. This not only aids the development of local projects but may also attract overseas DeFi builders back to the U.S. market, creating a healthier, compliant, and competitive decentralized finance landscape.

In the context of Republican SEC commissioners advocating for a more friendly crypto policy, it indicates that regulators are truly trying to understand the essence of DeFi and are willing to make corresponding legal adjustments. For the entire industry, this is not only a shift in regulatory attitude but may also be a redefinition of innovation, responsibility, and freedom. DeFi has grown wildly since 2020, from a regulatory vacuum to the SEC now adjusting its regulatory framework to legitimize DeFi. This move shows us the confidence that DeFi can perfectly integrate with traditional finance to achieve coherence.