From "temporary safe harbor" to "structured compliance": how the new SEC policy will revolutionize the US crypto market

What is happening: the SEC’s radical shift in 2025

By July 2025, the new SEC Chairman Paul Atkins officially launched the “Innovation Exemption,” marking the transition from a decade of confusing enforcement to a clear and proactive regulatory model. It is not just an administrative measure: it represents the official recognition that the crypto sector deserves a dedicated regulatory space, not perpetual persecution.

The key innovation is this: crypto projects will be able to operate in the United States for 12-24 months under simplified rules, while working toward verifiable decentralization. After this period, they will no longer need to seek permission: if they meet decentralization criteria, they will automatically enter a regime of commodities or utilities, leaving the securities framework.

Atkins confirmed that the implementation is scheduled for January 2026. This timing is not accidental: it coincides with the implementation of the CLARITY Act and the GENIUS Act in Congress, forming a tripartite system of regulatory protection.

How it works: the actual functioning of the exemption

Who can apply and for how long

The Innovation Exemption is open to anyone: exchanges, DeFi protocols, stablecoin issuers, even DAOs can apply. There is no discrimination based on development stage or project size.

The exemption period (12-24 months) represents an “incubation window” where teams can raise funds, test products, and experiment with models without the burden of full S-1 registration. During this period, only simplified disclosure is required: less bureaucracy, fewer legal expenses.

The design echoes the CLARITY Act under discussion in Congress, which allows startups to raise up to $75 million annually from the public with light procedures, instead of through the traditional registration system.

Constraints are not absent, they are flexible

Atkins emphasizes that the exemption follows general principles, not fixed rules. Companies must still ensure:

• Periodic reviews every quarter: operational reports and regular SEC audits
• Retail protection: risk notices and investment limits for unaccredited investors
• Conforming technical standards: possibility of adopting whitelists of certified participants or standards like ERC-3643 (which incorporates identity verification and restrictions in smart contracts)

The classification of tokens and the exit pathway

The SEC has created a new four-category classification system: commodity/network token (like Bitcoin), utility token, collectible (NFT), and tokenized securities.

The “trick” of the exemption is the exit pathway: if a token classified as a commodity, utility, or collectible reaches a “sufficient decentralization” or “functional completeness,” it automatically exits the securities regime. No SEC decision is needed: regulation self-disables when criteria are met.

This means that even tokens initially issued as securities, once the investment cycle is complete and decentralization achieved, see their subsequent transactions cease to be “security trading.” It is a control transfer model: the SEC does not control forever, only as long as necessary.

The three pillars of the new American regulatory framework

First pillar: the CLARITY Act resolves jurisdictional conflicts

For decades, SEC and CFTC fought over cryptocurrencies. The CLARITY Act finally draws a line: the SEC oversees issuance and primary fundraising, the CFTC oversees spot trading of digital commodities.

The CLARITY Act introduces the “mature blockchain” test: a project that has distributed tokens in a decentralized manner, has independent governance, and no control group is automatically considered a commodity, thus escaping SEC oversight.

The SEC’s Innovation Exemption is the temporary administrative bridge toward this test: a project can grow during the 12-24 months and then “graduate” from the securities regime to the commodities regime seamlessly.

Second pillar: the GENIUS Act isolates stablecoins

The GENIUS Act, effective July 2025, is the first comprehensive federal law on digital assets in the USA. It does one crucial thing: excludes payment stablecoins from both securities and commodities. It places them under banking supervision (OCC).

Stablecoin issuers must maintain 1:1 reserves in dollars or government securities, and cannot pay interest. This model protects consumers without overlapping SEC jurisdiction.

Since the GENIUS Act has already clarified the framework for stablecoins, the SEC’s Innovation Exemption focuses on innovative sectors: DeFi, network tokens, emerging protocols.

Third pillar: inter-agency coordination

SEC and CFTC have announced joint statements and permanent roundtables. Platforms registered with one or the other agency can facilitate spot trading of certain crypto assets, eliminating jurisdiction conflicts.

One of the main axes of coordination is precisely the regulation of the Innovation Exemption and DeFi. Fewer gaps, less confusion.

The bright side: who benefits and why

Startups and scale-ups: low-cost entry

In recent years, a crypto project wanting to operate legally in the USA spent millions on legal counsel and over a year in proceedings. The Innovation Exemption radically cuts these times and costs.

Projects that had chosen to emigrate (relocate) to Singapore, Dubai, or other crypto havens to escape US regulatory uncertainty will now reconsider the American market. Regulatory certainty attracts venture capital, angels, and institutional investors.

The exemption allows rapid experimentation: DeFi protocols, Web3 apps, new tokenomics models can be tested in real time.

Large financial institutions: the moment to enter

JPMorgan, Morgan Stanley are already embracing digital assets. The SEC has abolished SAB 121 (an accounting rule that required custodians to record crypto assets as liabilities). This was a massive block.

Now banks can offer custody, staking, large-scale crypto services without balance sheet pressures. Along with the flexibility of the Innovation Exemption, large institutions enter with lower capital costs and legal certainty.

The dark side: the risk of “traditionalization” of DeFi

The crucial point: KYC/AML in decentralized protocols

The Innovation Exemption requires its users to implement “reasonable user verification procedures.” For DeFi, this means KYC/AML in smart contracts: whitelists, authorized pools, transfer restrictions.

The ERC-3643 standard incorporates identity checks and centralized freezes in tokens. If every transaction checks a whitelist and tokens can be frozen by a central authority, is it still “decentralized”?

Uniswap founder and the DeFi community believe that regulating software developers as financial intermediaries stifles innovation and harms American competitiveness globally.

Opposition from traditional finance

The World Federation of Exchanges and Citadel Securities have written to the SEC asking to abandon the plan. They fear “regulatory arbitrage”: the same tokenized asset under two different regimes.

The Securities Industry and Financial Markets Association (SIFMA) emphasizes that tokenized securities require the same protections as traditional financial instruments, and loosening regulation increases fraud risks.

USA vs. Europe: two models, two speeds

The Innovation Exemption reflects the American philosophy: tolerate initial uncertainty for maximum speed in innovation.

The European MiCA follows the opposite path: prior authorization, uniform requirements, structural guarantees, a stable but slower market.

For global companies, this means “market-to-market” strategies: a dollar-pegged stablecoin must meet both SEC/GENIUS Act criteria and MiCA criteria. Double compliance is mandatory.

In the next 3-4 years, this divergence will drive global regulatory arbitrage. A stablecoin might launch first in the USA under exemption, then enter Europe with a different structure, then Asia with yet another model.

The startup roadmap: how to leverage the window

If you are a crypto startup, here’s what to do:

1. View the 12-24 months as a low-cost window, not a permanent solution. The exemption expires.

2. Design decentralization from day one, not as a “continuous generic effort.” You must demonstrate verifiable steps: token distribution, independent governance, no centralized control. SEC will assess if you have achieved “sufficient decentralization” at the exemption’s end.

3. If you cannot fully decentralize or do not accept KYC/AML in your protocols, prepare a Plan B: perhaps the US retail market will not be for you after 2027-2028.

4. Invest in conforming standards (ERC-3643, technical compliance layer) from the start. Don’t delay.

5. Track evolving rules: the CLARITY Act, the GENIUS Act are laws, but SEC and CFTC are still creating guidance. Stay agile.

Conclusions: “structured compliance” as a new competitive standard

The SEC’s Innovation Exemption marks the shift from the era of “wild growth” in crypto to that of “structured compliance.” It is not restrictive: it is an acknowledgment that the sector has grown enough to deserve a clear regulatory framework, not ambiguous persecution.

In 2026, when the exemption comes into effect, you will see a wave of projects returning to the USA, venture capital accelerating investments, large institutions offering institutional crypto services. 2026 will be the year of the “birth of structured compliance.”

However, the global risk remains real: the divergence between the flexible US model and the strict European MiCA will continue to create fragmentation. In the long term (2030+), convergence toward common standards (uniform AML/KYC, reserve requirements for stablecoins) is plausible, but for now, there are two parallel paths.

The key to business success in the next 3-5 years will be the ability to move toward verifiable decentralization and solid compliance, turning regulatory complexity into a competitive advantage in global markets.

It will no longer be code deciding the fate of crypto. It will be the ability to clearly allocate assets and build a robust regulatory foundation. This is the new game.