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SEC Chair Proposes ‘Innovation Exemption’ for DeFi Developers
At the SEC’s final crypto roundtable, Chairman Paul Atkins announced that the agency is working on an “innovation exemption” to support decentralized finance (DeFi) development. The proposed exemption aims to reduce regulatory barriers for blockchain developers, allowing them to build decentralized platforms without facing immediate enforcement risks.
Atkins acknowledged that many DeFi projects operate without centralized administrators and emphasized that developers should not be held liable for how their open-source code is used. “We want to create space for innovation while ensuring investor protection,” he said, signaling a more developer-friendly approach.
The exemption would offer a new regulatory pathway for on-chain financial products and services, potentially speeding up time-to-market while still keeping them within the SEC’s oversight framework.
Commissioner Hester Peirce supported the move, reiterating that writing and publishing code should not trigger enforcement, especially given First Amendment protections. However, she warned that not all platforms calling themselves “decentralized” will qualify under the new approach.
The shift reflects a broader change in SEC leadership’s stance, with a Republican majority favoring innovation and flexibility in crypto regulation. For long-time crypto advocates, the roundtable marked a surprising but welcome change in tone.
Erik Voorhees, founder of ShapeShift, noted: “Twelve years ago, I got a subpoena from the SEC. Today, I’m speaking here. That’s real progress.”
The SEC has not yet released a timeline for the exemption, but its development will be closely watched by the DeFi community and crypto investors alike.
