• SEC Chairman Paul S. Atkins says a formal crypto innovation exemption framework could be unveiled within weeks, marking a significant policy shift.
  • The exemption is a core component of the SEC's broader "Project Crypto" initiative, aiming to allow companies to test novel business models under principles-based safeguards.
  • The move follows a series of 2025 regulatory actions, including approvals for crypto ETPs and a no-action letter for DePIN tokens, signaling a more structured approach to digital assets.

SEC Chairman Paul S. Atkins has indicated that a long-awaited regulatory framework to provide tailored relief for cryptocurrency activities is imminent. Speaking at a recent industry event, Atkins stated the agency aims to move to formal rulemaking for an "innovation exemption" and expects the work to be completed by the end of 2025 or in the first quarter of 2026, with a potential release "in a month or so." This follows delays caused by the recent government shutdown, according to people familiar with the agency's timeline.

The proposed exemption is a cornerstone of the SEC's comprehensive "Project Crypto" initiative, launched earlier this year to promote blockchain innovation in U.S. markets. Atkins has described it as a top priority—a framework that would permit companies to pilot new business models under defined guardrails rather than requiring full, immediate compliance with existing securities rules. In exchange for this flexibility, participants would likely be required to report periodically to the SEC.

This pivot represents a notable departure from the agency's historically cautious and often adversarial stance toward the crypto industry. The shift from incremental guidance to pursuing durable, comprehensive frameworks aligns with persistent industry calls for clearer regulatory pathways. "We are back on track and aim to support crypto innovation after years of resistance," Atkins was quoted as saying, underscoring the recalibrated approach.

The innovation exemption sits within a wider regulatory overhaul. In November, Atkins outlined the next phase of Project Crypto, which includes creating clear token taxonomy and classification guidance and developing a formal "Regulation Crypto" proposal expected in 2026. The SEC has already taken concrete steps in 2025, such as approving in-kind creations for crypto ETPs in July and issuing a no-action letter for DePIN token distributions in September.

Market participants are watching closely, as the exemption could reduce compliance barriers for startups and established firms exploring blockchain applications. The SEC's efforts are unfolding alongside congressional action on the Digital Asset Market Structure bill (CLARITY Act) and coordinated initiatives with the CFTC, which announced its own plan in September to enable tokenized collateral in derivatives markets. While investor protection remains a stated priority, the coming weeks are poised to reveal the specific contours of the SEC's new, more innovation-friendly posture.

Correction: An earlier version of this article misstated the timeline for the "Regulation Crypto" proposal. It is expected in 2026, not late 2025.