SEC Chair Paul Atkins Wants to Let DeFi Thrive With Fewer Rules

The U.S. Securities and Exchange Commission may soon ease the regulatory burden on decentralized finance platforms as Chairman Paul Atkins outlines a potential "innovation exemption" aimed at protecting developers and enabling new blockchain-based systems to thrive.

In the final session of a five-part crypto roundtable series, SEC Chairman Paul Atkins signaled a notable shift in regulatory tone, especially regarding decentralized finance (DeFi).

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Code, Not Conduct

Speaking to industry experts and developers on Monday, Atkins said he has directed SEC staff to explore exemptions or guidance that would let DeFi platforms operate with fewer barriers.

The proposal seeks to support on-chain financial systems and reflect the technological shift toward decentralized models.

He emphasized that this principle should not vanish online, especially in a financial ecosystem increasingly powered by decentralized technologies. The comments mark a stark contrast with previous SEC leadership, which leaned heavily on enforcement and broad interpretations of securities laws.

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At the roundtable titled "DeFi and the American Spirit," Atkins and other Republican commissioners argued that software developers should not be held liable for how decentralized tools are used.

He rejected the notion that writing code constitutes a regulated activity if that code enables financial transactions. Commissioner Hester Peirce echoed this view, warning against infringing on First Amendment rights.

DeFi and the Regulatory Crossroads

DeFi refers to the class of blockchain-based tools that replicate traditional financial services, such as lending, trading, and insurance, without relying on centralized intermediaries. These platforms have long existed in a gray area of U.S. financial regulation, with developers often facing investigations or uncertainty about their legal status.

Atkins called for reevaluating legacy frameworks and asked staff to assess whether new guidance or rulemaking would help entities interact with DeFi tools while remaining compliant.

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This change in direction coincides with a broader shift at the SEC following the departure of former Chair Gary Gensler and the arrival of the Trump-era appointees. Under the new leadership, the SEC has rolled back several enforcement actions and launched a Crypto Task Force focused on industry engagement.

The roundtables, held throughout the past few months, covered custody, trading, tokenization, and securities definitions. The latest discussion on DeFi capped the series, reinforcing the agency’s pivot from adversarial enforcement to rulemaking tailored to emerging technologies.