SEC chair put a DeFi innovation exemption on the agenda

U.S. Securities and Exchange Commission Chairman Paul Atkins said on June 9, 2025 that he had directed agency staff to consider a conditional “innovation exemption” for on-chain products and services. The prospective framework could cover both registered and unregistered market participants willing to comply with specified conditions while the SEC developed longer-term rules.

The announcement, delivered at the SEC Crypto Task Force’s “DeFi and the American Spirit” roundtable in Washington, put decentralized finance inside the chairman’s regulatory agenda. It did not create an exemption, approve a product or alter federal securities law. Atkins expressly identified his remarks as his individual views rather than a position adopted by the Commission.

From discussion to a staff assignment

Atkins asked staff to explore guidance or rulemaking that could let SEC registrants transact with self-executing software systems while complying with applicable law. He also requested consideration of amendments accommodating issuers and intermediaries that wanted to administer on-chain financial systems.

The proposed innovation exemption was described as an interim route while those broader rules were being developed. No text, eligibility test, application procedure, duration, Commission vote or effective date accompanied the June 9 remarks. The verifiable development was therefore a chairman-level instruction to study conditional relief—not relief upon which a company could immediately rely.

That distinction mattered because the SEC’s existing framework was built largely around identifiable issuers and intermediaries such as broker-dealers, investment advisers, exchanges and clearing agencies. DeFi protocols can distribute functions through smart contracts, governance arrangements, interfaces and independent users. Determining where control, discretion or custody remains can affect whether regulated intermediary activity is present.

Self-custody and software boundaries

Atkins presented personal control of crypto assets as a property-rights issue and supported greater flexibility for market participants to use self-custodied wallets. He argued that software engineers should not become subject to federal securities laws solely because they publish wallet or on-chain software.

Commissioner Hester Peirce drew a related distinction in her June 9 remarks. She said merely publishing code should not be treated the same as operating, administering or maintaining a system, taking custody of client assets, or making execution decisions. She also warned that centralized businesses could not avoid regulation simply by attaching a DeFi label to their services.

Those statements established regulatory preferences and analytical boundaries, but not binding legal tests. Whether a developer, interface operator, governance participant or service provider fell within SEC jurisdiction still depended on conduct, control, applicable statutes and any later Commission or court action.

The disagreement inside the SEC

Commissioner Caroline Crenshaw used the same roundtable to emphasize unresolved questions involving market structure, transparency, registration and retail-investor protection. She argued that major changes should proceed through formal rulemaking with notice, public comment and required public-interest findings.

Her remarks supplied an important institutional limitation: the SEC had not reached a unified answer on how decentralized systems should be regulated. The roundtable ran from 1 p.m. to 5 p.m. Eastern and concluded a five-event series covering security status, trading, custody, tokenization and DeFi. Discussion could inform policy, but it was not itself policy.

What was knowable on June 9

The consequential event was a shift in regulatory direction. The SEC chairman had asked staff to examine a pathway that could permit controlled on-chain experimentation while permanent rules were considered. Developers and financial firms received a public signal that self-custody, non-intermediated software and tailored relief were priorities under the agency’s new leadership.

What remained unknown was more substantial: which activities would qualify, what investor protections or disclosures would be required, how the SEC would distinguish software from intermediary conduct, and whether a majority of commissioners would approve any resulting proposal. No reliable event-window evidence reviewed for this reconstruction establishes that the remarks caused a particular cryptocurrency’s price, volume or volatility to change on June 9, 2025.