U.S. SEC Chair: Plans to Introduce an “Innovation Exemption” Mechanism to Support On-Chain, Compliant Trading of Tokenized Securities

U.S. SEC Chairman Paul Atkins delivered a speech marking his first anniversary in office at the Economic Club of Washington, D.C. The SEC is advancing reforms to its digital asset regulatory framework, integrating them into its “A-C-T” strategy—modernizing regulation, clarifying regulatory boundaries, and reshaping the rulemaking system. Regarding crypto assets, the SEC has released a classification framework for crypto tokens, categorizing digital assets into five types—four of which are not considered securities. Atkins stated that the SEC will soon introduce an “Innovation Exemption” mechanism, providing a limited, compliant framework for market participants to conduct tokenized securities transactions on-chain. The SEC has also launched Project Crypto to adapt securities rules and the regulatory system to the growing trend of capital markets moving on-chain. Additionally, last month the SEC signed a Memorandum of Understanding (MOU) with the CFTC to harmonize key definitions, clarify regulatory jurisdictions, and coordinate oversight of shared regulatory matters—including digital assets. Atkins further noted that the U.S.’s prior approach to crypto asset regulation had driven innovation overseas.