Written by: Cryptofada
Compiled by: Felix, PANews
On June 9, the special cryptocurrency working group roundtable hosted by SEC Chairman Paul Atkins hinted at favorable conditions for cryptocurrency and DeFi participants in multiple ways. This represents the most supportive attitude from U.S. regulators towards DeFi in history, yet most people have yet to realize it. Although not yet formally legislated, these remarks:
Creating a regulatory environment that encourages innovation
Strengthening the legitimacy of self-custody and on-chain participation
Hinting at more lenient and wise rules for DeFi experimentation
This is likely to be the trigger for a new wave of DeFi renaissance led by the U.S. If you are in the crypto space, you know this undoubtedly releases a signal: a new era of regulated DeFi is being born in the U.S. This is not just a regulatory shift, but an investment game.
Key positive signals from the SEC roundtable
1. Financial independence
Atkins links economic freedom, innovation, and private property rights with the spirit of DeFi. This narrative redefines DeFi as a continuation of the American financial independence spirit, rather than a regulatory threat. This contrasts sharply with previous confrontational attitudes.
2. Eliminating the uncertainty of the Howey test: Staking, mining, and validators—are not securities
Clearly state that staking, mining, and validator operations are not securities transactions, eliminating a significant regulatory cloud that has long hindered institutional participation in consensus mechanisms. This addresses the fundamental concern that network participation itself may trigger securities regulation due to the Howey test. This clear provision directly benefits the $47 billion liquid staking market. The U.S. SEC has explicitly stated that participating as a miner/validator in proof-of-stake or proof-of-work, or participating in staking-as-a-service, is essentially not a securities transaction. This reduces regulatory uncertainty in the following areas:
Liquid staking protocols (e.g., Lido, RocketPool)
Validator infrastructure companies
DeFi protocols with staking capabilities
3. On-chain product innovation exemptions
Atkins proposed a 'conditional exemption' or 'innovation exemption' policy that allows for rapid experimentation and launch of new DeFi products without cumbersome SEC registration. The proposed 'conditional exemption' mechanism creates a regulatory sandbox designed specifically for DeFi innovation. This approach draws from successful fintech regulatory frameworks in jurisdictions like Singapore and Switzerland, allowing controlled experiments without fully meeting securities registration requirements: this may pave the way for the following situations:
Permissionless innovation
U.S. DeFi product launches
Faster integration with traditional finance
4. Self-custody is protected
Atkins advocates for the self-custody of digital assets, calling it a 'fundamental American value.' This supports the following types of products:
Wallet providers (e.g., MetaMask, Ledger)
Non-custodial exchanges (e.g., Uniswap)
On-chain trading and investment tools
5. Publicly support Trump's pro-crypto agenda
Atkins mentioned Trump's goal of making the U.S. the 'global cryptocurrency capital,' aligning regulatory tone with the current political leadership. As the dust settles from the 2024 U.S. elections, this political alignment may unleash more favorable regulatory policies and drive government-led crypto infrastructure development.
6. Encouragement of on-chain resilience
Atkins referenced data from S&P Global, praising that DeFi continued to operate during the collapse of centralized financial systems (such as FTX and Celsius). This is a direct acknowledgment of DeFi's reliability under stress conditions.
Strategic positioning framework
Layer 1: Core infrastructure protocols
The most direct beneficiaries of regulatory clarity are the protocols that make up the backbone of DeFi infrastructure. These protocols typically have high total locked value (TVL), mature governance structures, and clear utility functions that align with traditional financial services.
Liquid staking protocols: With the clarity of staking rules, protocols such as Lido Finance ($LDO), Rocket Pool ($RPL), and Frax Ether ($FXS) are expected to attract institutional capital seeking compliant staking solutions. With the removal of regulatory barriers, the $47 billion liquid staking market could see substantial growth.
Decentralized exchanges: Uniswap ($UNI), Curve ($CRV), and similar protocols benefit from self-custody protection and enjoy innovation exemptions. These platforms can launch more complex financial products without facing regulatory delays.
Lending protocols: Aave ($AAVE), Compound ($COMP), and MakerDAO ($MKR) can expand their institutional-facing products under clearer regulation, especially in automated lending and synthetic asset creation.
Layer 2: Integration of real-world assets
The innovation exemption framework is particularly beneficial for connecting protocols in traditional finance and DeFi. Real-world asset (RWA) protocols can now experiment with tokenization models without cumbersome securities registration processes.
Leaders in the RWA space: Ondo Finance, Maple Finance, and Centrifuge are expected to accelerate institutional adoption of tokenized securities, corporate credit, and structured products. The current TVL in the RWA space is approximately $8 billion, and if the regulatory path becomes clearer, this space could rapidly expand.
Layer 3: Emerging innovation categories
The conditional exemption mechanism creates opportunities for entirely new categories of DeFi products that had previously stalled due to regulatory uncertainty.
Cross-chain infrastructure: Protocols supporting secure asset transfers across chains can now develop more complex products without worrying about inadvertently violating securities laws.
Automated financial products: Yield optimization protocols, automated trading systems, and algorithmic asset management tools can now be developed and deployed faster in the U.S. market.
How to prepare for the future DeFi bull market?
1. Doubling down on highly reliable DeFi protocols
Focus on protocols that are likely to benefit from regulatory clarity:
Staking and LST: Lido, RocketPool, ether.fi, Coinbase's cbETH
Decentralized exchanges: Uniswap, Curve, GMX, SushiSwap
Stablecoin protocols: MakerDAO, Ethena, Frax
RWA protocols: Ondo, Maple, Centrifuge
2. Hoarding governance tokens
Tokens of core DeFi infrastructure (especially those with high TVL and good regulatory compliance) may benefit: $UNI, $LDO, $AAVE, $RPL, $MKR, $FXS, $CRV.
3. Participate in on-chain governance
Participate in governance forums and engage in delegated voting. Regulators may be more inclined to favor protocols with transparent and decentralized governance.
4. Build or contribute to the U.S. crypto ecosystem
The SEC's signals will make the following parties safer:
On-chain startups
Wallet developers
Staking-as-a-service companies
Open-source software contributors
Now is the time to go:
Launch or contribute to public goods
Apply for funding or participate in DAO ecosystem building (e.g., Optimism Retro Funding, Gitcoin)
Join DeFi organizations or DAOs in the U.S.
5. Getting ahead in projects that encourage institutional participation
Focus on institutional capital inflows and innovative exemption pilot projects:
Building positions in DeFi protocols that can integrate with institutions
Keep an eye on pilot announcements from companies like Coinbase, Franklin Templeton, and BlackRock
Closely monitor the Ethereum ecosystem, especially given the clarity of staking and the high adoption rate of infrastructure.
6. Closely monitor 'innovation exemption' guidelines
If the U.S. SEC issues clear standards, you can:
Launching new DeFi tools that meet exemption criteria
Obtaining airdrops or incentives from compliant protocols
Creating content or services that simplify the exemption framework
Institutional adoption catalyst analysis
Capital flow forecasts
Regulatory clarity opens multiple previously blocked pathways for institutional adoption:
Traditional asset management companies: Firms like BlackRock and Fidelity can now explore integrating DeFi into their businesses for revenue growth, portfolio diversification, and operational efficiency improvements. Currently, institutional adoption of DeFi is less than 5% of traditional asset management scale, indicating significant growth potential.
Corporate fund management: Companies can now consider using DeFi protocols for fund management activities, including generating returns on cash reserves and automated payment systems. The corporate fund management market has approximately $5 trillion in assets, some of which may migrate to DeFi protocols.
Pension funds and sovereign funds: Large institutional investors can now view DeFi protocols as a legitimate asset class for asset allocation. These investors typically invest with capital sizes ranging from $100 million to $1 billion, representing a potential order-of-magnitude increase in protocol TVL.
Innovation acceleration metrics
The innovation exemption framework can significantly accelerate the development process of DeFi:
Product development cycle: Previously, new DeFi products required 18 to 24 months of legal review, potentially involving the U.S. SEC. The exemption framework is expected to shorten this cycle to 6 to 12 months, effectively accelerating the pace of financial innovation.
Geographic repatriation: Due to regulatory uncertainty in the U.S., many DeFi protocols are developed overseas. The new framework may attract these projects back to U.S. jurisdiction, increasing domestic blockchain development activities.
Case study: Transforming $10,000 to $100,000
The above strategic framework can be applied to different funding sizes, developing specific asset allocation strategies for different risk appetites and investment horizons.
Timeline: 12 to 24 months
Funding range: $10,000 to $100,000
Target investment return: 10x returns through a diversified strategy
Retail investor strategy (capital range: $10,000 to $25,000)
For retail participants, focus should be on mature protocols with clear regulatory positioning and strong fundamentals. Conservative strategies may allocate 60% of funds to liquid staking protocols and mainstream DEXs, 25% to lending protocols, and 15% to emerging categories with high upside potential.
The key lies in obtaining governance participation rights and yield generation opportunities that were previously available only to professional investors. Under clear regulations, these protocols can offer more transparent and accessible mechanisms.
High-net-worth strategies (capital range: $25,000 - $100,000)
This capital range can support more complex strategies, including direct participation in protocols, delegated governance, and the use of institution-grade DeFi products. Strategic allocation may focus on governance tokens of major protocols (40%), direct staking positions (30%), exposure to RWA protocols (20%), and innovative stage protocols (10%).
High-net-worth participants can also engage more actively in governance and create possible additional value through governance mining and participating in early protocol development.
Institutional strategies (capital range: $100,000 and above)
Institutional-scale capital can participate in wholesale DeFi operations, including directly operating validation nodes, managing protocol treasuries, and adopting complex yield strategies. These participants can also engage in protocol collaborations and customized integration development.
Institutional strategies should emphasize operational protocols and establish clear regulatory compliance frameworks, robust governance structures, and institution-level security measures. At this scale, direct staking operations become feasible, and their risk-adjusted returns may be higher compared to liquid staking protocols.
Return potential analysis
Conservative predictions based on past DeFi application cycles indicate that the returns that may be obtained within these funding ranges are as follows:
Token appreciation: As institutional adoption accelerates and protocol utility improves, regulatory clarity typically leads to a 3 to 5 times appreciation of governance tokens in favorable positions.
Yield generation: DeFi protocols provide annual yields of 4-15% through various mechanisms such as staking rewards, transaction fees, and lending interest. As institutional capital enters the market, regulatory clarity can stabilize and potentially enhance these yields.
Innovation access: Early participation in innovative exemption protocols could yield extremely high returns (5 to 10 times), as these projects develop new financial primitives and capture market share in emerging categories.
Compound effect: The combination of token appreciation, yield generation, and governance participation can produce compounded returns, significantly outperforming traditional investment options over a 12 to 24 month period.
Implementation timeline considerations
Phase 1 (Q3 to Q4 2025): Implementation of preliminary regulatory guidelines, early institutional pilot projects, and appreciation of governance tokens in favorable positions.
Phase 2 (Q1 to Q2 2026): Broader institutional adoption, new product launches under innovation exemptions, and significant growth in TVL of major protocols.
Phase 3 (Q3 to Q4 2026): Full institutional integration, possible launch of traditional finance and DeFi fusion products, and implementation of a mature regulatory framework.
The DeFi roundtable hosted by the U.S. SEC in June 2025 not only marks the evolution of regulation but also heralds the beginning of the institutional era of DeFi. The combination of regulatory clarity, political support, and technological maturity creates unique opportunities for early positioning to avoid missing out before broader market recognition drives valuations higher.
For mature investors, the current environment presents a rare fusion of regulatory clarity, technological advancement, and market undervaluation. Protocols and strategies that can attract institutional capital flows in the next 18 months are likely to determine the next phase of growth and value creation in DeFi.
The transition from experimental technology to regulated financial infrastructure marks a fundamental shift in the value proposition of DeFi. Those strategically positioning themselves during this regulatory transition may benefit from the immediate effects of institutional adoption and the long-term value creation brought by mature, regulated financial markets.
