Overview

• At a New York legal forum on Oct. 7, Chair Paul Atkins reaffirmed that the SEC is aiming to finalize an innovation exemption by the end of 2025 or early 2026, noting the government shutdown has hamstrung rulemaking and could affect timing.
• The proposed framework, first directed in June, would grant conditional, temporary exemptive relief so on‑chain finance and fintech projects can operate under structured supervision while broader rules are developed.
• Atkins framed the effort as a pivot from regulation-by-enforcement, saying years of stringent oversight pushed development overseas and that the agency now wants builders to feel they can operate in the U.S.
• Industry responses were cautiously optimistic, with executives saying a defined sandbox could lower the cost of experimentation and help bridge the gap between innovation and regulation if it reflects how crypto systems function.
• The initiative advances alongside legislative and interagency work, including the GENIUS Act becoming law and Treasury publishing proposed stablecoin rules that signal a broader move toward formal oversight.