Key Points
The U.S. Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission (CFTC) have expanded their policy roundtable and proposed 'innovation exemptions,' hinting at deeper changes in the industry in the future.
On September 5, Washington further opened its doors to cryptocurrency. A new bill draft proposed by the Senate Banking Committee suggests comprehensive reforms that will loosen regulations concerning DeFi, staking, and airdrops — all of which have long been caught in regulatory gray areas. Meanwhile, the U.S. Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission (CFTC) are showing a spirit of collaboration, promising to ease enforcement and encourage innovation. Here’s a summary.
Reassess exemptions.
The Senate Banking Committee draft goes further than earlier versions, listing a broader range of exemptions for key cryptocurrency activities. Staking rewards have long been a contentious point between regulators and the industry, and this bill explicitly addresses it, tending not to classify them as securities. AirDrops are also included, becoming one of many activities exempt from the strictest regulation. This practice aligns with recent initiatives by the Commodity Futures Trading Commission (CFTC), which tends to favor limited exemptions to encourage innovation while still maintaining safeguards.
Historically, the nature of staking rewards has been vaguely defined. Cryptocurrency industry practitioners believe that staking is a normal behavior based on the cryptocurrency network ecosystem that supports the stable operation of the network and should not be overly regulated; however, regulators have previously worried that staking rewards might involve disguised investment returns and pose financial risks. The current bill draft tends to not consider staking rewards as securities, which is significant good news for many investors participating in staking activities and related platforms. For example, in some proof-of-stake (PoS) mechanism cryptocurrency networks, a large number of users obtain rewards by staking tokens. If previously classified as securities, these users might face complex compliance processes and potential legal risks. Now, this tendency clarifies the legality of staking activities to some extent, allowing related platforms to conduct business more confidently, attract more users to participate in staking, and promote the prosperity of the cryptocurrency network ecosystem.
AirDrops, as a common method for promoting and distributing cryptocurrencies, have also faced regulatory uncertainty in the past. Project parties hope to expand their influence and community size by distributing tokens for free to specific user groups. However, due to unclear regulations, some project parties have been hesitant when conducting AirDrops, fearing violations of securities laws. Including them within the exemption scope means that project parties now have a clearer legal basis for conducting AirDrops, allowing them to utilize this promotional method more freely, aiding the development and promotion of emerging cryptocurrency projects and invigorating the market.
Once enacted, these changes may provide the long-awaited clarity for participants operating in gray areas, especially regarding staking and token distribution practices. Many small cryptocurrency startups have previously refrained from scaling up their operations or attracting investment due to the regulatory ambiguity surrounding staking and token distribution. Now, they can develop clearer business strategies based on the new rules, attract investor attention, and drive innovation in the cryptocurrency industry. For investors, they will also be able to better understand the risks and legality of related investment activities, making more informed investment decisions.
The SEC and CFTC adopt a more moderate regulatory approach.
The U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission issued a joint statement emphasizing coordination. The statement said, "This is a new day for the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission; today we begin a long-awaited journey to provide the clarity the market deserves." The two regulatory agencies expanded the scale of the joint cryptocurrency policy roundtable, developing an agenda covering everything from predictive markets to all-weather traditional financial trading. "By working together, we can transform our country's unique regulatory structure into a source of power for market participants, investors, and all Americans."
Previously, the SEC and CFTC had unclear divisions of responsibility in the field of cryptocurrency regulation, leading to overlaps and disputes in some regulatory matters, causing confusion for cryptocurrency industry practitioners. For instance, regarding the regulation of certain cryptocurrency derivatives, there were ambiguous areas of jurisdiction between the two agencies, making compliance challenging for relevant trading platforms. Now, both sides are expanding the scale of the joint cryptocurrency policy roundtable and developing a broad agenda aimed at clarifying their respective regulatory responsibilities through enhanced cooperation to provide unified and clear regulatory rules for the cryptocurrency market.
In terms of predictive markets, the predictive markets for cryptocurrencies have a unique operating model that involves predicting and betting on various event outcomes, making regulation challenging. Through a joint agenda, the SEC and CFTC can collaboratively study and develop a regulatory framework suitable for predictive markets, ensuring the normal operation of the market while preventing potential financial risks. In the area of integrating traditional financial trading with cryptocurrency trading, as the connection between the cryptocurrency market and traditional financial markets becomes increasingly tight, with some traditional financial institutions beginning to venture into cryptocurrency custody and trading, establishing unified regulatory rules helps to standardize market order and protect investor interests.
A prominent feature is the idea of 'innovation exemption,' which provides more breathing room for DeFi projects to experiment without immediately facing regulatory resistance. DeFi (decentralized finance) projects have rapidly developed in recent years, attracting a large number of users and funds due to their decentralized and trustless characteristics. However, due to their innovation and differences from traditional financial systems, DeFi projects face numerous regulatory challenges during development. Many DeFi projects are incompatible with traditional financial regulatory rules in areas such as smart contract applications and capital flow, limiting project development. The 'innovation exemption' provides a certain buffer zone for DeFi projects, allowing developers to boldly innovate in technology and explore business models within the exemption scope.
For instance, some emerging DeFi lending projects can further optimize lending processes and improve capital efficiency with the support of the 'innovation exemption,' exploring more flexible collateral and repayment methods. This not only benefits the development of DeFi projects themselves but also brings new vitality and development directions to the entire cryptocurrency industry. However, some market observers warn that overly rapid relaxation of enforcement may cause investor unease and weaken protective measures. Investors have long been accustomed to investing in a relatively strict regulatory environment and worry that relaxed enforcement may lead to an increase in market fraud and compromise fund safety. For example, in some cryptocurrency markets with relaxed regulations, incidents of project founders absconding and funds being stolen due to smart contract vulnerabilities have occurred, causing significant losses for investors. Therefore, regulators need to carefully weigh the implementation of lenient policies like the 'innovation exemption' to find a balance between encouraging innovation and protecting investor rights.
Based on 'a new day'.
AMBCrypto previously reported that the U.S. Securities and Exchange Commission announced a unified agenda for spring 2025, aimed at providing clearer rules for the cryptocurrency market. At that time, SEC Chairman Paul Atkins described this as the beginning of a 'new day' for the agency. Its focus is on simplifying operations for market participants while preventing misconduct. This agenda, combined with joint guidance from the Commodity Futures Trading Commission (CFTC), opens the door for traditional exchanges to handle spot cryptocurrency assets.
In the spring 2025 unified agenda, the SEC has established a detailed regulatory framework for many aspects of the cryptocurrency market. Regarding the issuance of cryptocurrency assets, it clarifies the qualification requirements for issuers, information disclosure standards, etc., allowing cryptocurrency projects to have clear regulations when conducting activities such as initial coin offerings (ICOs), reducing issues like fraudulent issuances caused by unclear rules in the past. For market trading, it has established trading process specifications, anti-money laundering, and anti-terrorism financing requirements to ensure fairness, justice, and security in transactions. For example, it requires cryptocurrency trading platforms to establish comprehensive customer identity verification systems and monitor and report large transactions to prevent illegal funds from flowing into the cryptocurrency market.
The joint guidance from the CFTC and SEC further enhances the synergy of regulation. Traditional exchanges have long been cautious about engaging in spot cryptocurrency asset trading, primarily due to regulatory uncertainty and compliance difficulties. Now, under the joint guidance, traditional exchanges can clearly understand regulatory requirements, gain confidence in establishing compliant trading systems and risk control frameworks, and thus enter the spot cryptocurrency asset trading field. This will bring more capital and liquidity to the cryptocurrency market, enhancing market maturity and stability. Traditional financial institutions possess large customer bases and abundant financial resources, and their entry into the cryptocurrency market will attract more ordinary investors, promoting the popularization and application of cryptocurrencies and driving the cryptocurrency market towards a more standardized and mature direction.
