SEC to Formalize Innovation Exemption for Crypto By Year’s End

Key Highlights

• A new “Innovation Exemption” will allow crypto companies to introduce products and services faster by operating under clear rules
• Such developments will help the SEC to move from enforcement actions to collaboration to make the U.S. a crypto hub
• The new policy is expected to be finalized by the end of the year, according to SEC Chairman Paul Atkins

The United States Securities and Exchange Commission (SEC) is expected to introduce a new rule, an innovation exemption for cryptocurrency companies, before the end of 2025.

JUST IN: 🇺🇸 SEC plans to formalize “innovation exemption” for crypto companies by the end of this year.

— Watcher.Guru (@WatcherGuru) October 7, 2025

Regulatory Push for Clear Regulatory Path

This plan comes from SEC Chairman Paul Atkins, who wants to help these firms launch new products faster. Chairman Atkins has said the agency is working hard to introduce this framework by December 2025.

The exemption will allow crypto businesses to avoid old registration rules that slow down their expansion of their services. This new policy, along with the “Project Crypto,” would make it easier for companies to bring digital assets to the market right away.

Under the U.S. President Donald Trump’s pro-crypto administration, regulatory agencies are continuously working in the direction of bringing regulatory clarity for the digital asset industry.

The rule will possibly focus on streamlining how crypto firms follow the rules while encouraging new ideas in the industry. This innovation exemption is expected to update securities laws so that crypto products can fit better into the financial system. 

This could include investments like tokenizing stocks, bonds, and other assets on blockchain networks. 

These ongoing legislative efforts come after Trump pledged to make America the crypto capital of the world and compete globally in the crypto space. 

Earlier, Paul Atkins said, “This represents more than a regulatory shift — it is a generational opportunity.” 

Why SEC’s “Innovation Exemption” Is a Big Thing for Crypto Industry 

Amid the ongoing bullish momentum in the cryptocurrency market, the agency’s plan for an innovation exemption for crypto is a huge regulatory shift. It creates a pathway for crypto innovation in the U.S. by offering temporary relief from full registration. It aims to reverse the trend of firms moving offshore to foreign countries due to harsh regulations. 

This regulatory shift in favor of the crypto sector is a more collaborative stance from regulators, shifting from lawsuits to structured support. This “game-changer” could attract jobs and investment, helping the U.S. become a leader in blockchain by allowing startups and established companies to safely test new ideas. 

The news of the innovation exemption first came out in late September 2025. Chairman Atkins himself shared the plan while attending a public event, announcing the SEC’s push to finalize the new rules by the end of this year.

This exemption will apply to crypto trading and new product launches. It will allow firms to function under a lighter regulatory framework while still maintaining crucial investor protections. The main idea behind this new policy from the SEC is to eliminate barriers created by outdated laws that are incompatible with modern technologies like blockchain.

Some reports are also clarifying that the exemption will extend to digital asset firms focused on tokenizing real-world assets (RWA). Tokenization generally refers to the process of converting physical assets from the real world, such as property or art, into easily tradable digital tokens on the blockchain. 

SEC Focuses on Crypto Industry Compliance

To make this policy, the agency has been actively gathering input from industry leaders through closed-door meetings. However, the final details and policy draft still remain confidential.

Paul Atkins’ SEC is working in the opposite direction of the previous hostile-SEC under the leadership of Gary Gensler. Instead of directly taking enforcement actions on crypto-based innovations, the regulatory agencies are now working to end long-standing regulatory ambiguity.

The U.S. SEC is implementing a multi-faceted approach to bring clarity to the digital asset market. For example, the agencies have launched a major initiative called the Crypto Task Force. It is tasked with clarifying the critical distinction between securities and non-securities. 

This task force is also developing specialized disclosure requirements specifically for digital assets. It will ensure that companies provide transparent information to investors.