U.S. Regulators Prepare “Innovation Exemptions” as Crypto Policy Enters a New Phase

The final months of 2025 are shaping up to be pivotal for U.S. digital-asset regulation. After several years defined by enforcement-led oversight, both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are signalling a clear pivot: a move away from ad-hoc legal action and toward a structured environment for supervised experimentation. At the centre of this transition is a forthcoming framework of “innovation exemptions” that could create the closest U.S. equivalent yet to a digital-asset regulatory sandbox.

A Shift From Enforcement to Enablement

In recent months, the SEC has already advanced two major rulemaking initiatives:

Generic Listing Standards for exchange-listed crypto products
In-kind creation and redemption mechanisms for crypto-linked ETFs

Yet comments from SEC Chair Paul Atkins indicate that further measures may follow before the end of 2025. His stated ambition is to update the U.S. securities rulebook to “enable America’s financial markets to move on-chain,” while acknowledging that innovators frequently collide with the limits of legacy regulation.
Innovation exemptions are intended to provide the regulatory clarity needed to innovate without immediately triggering full registration obligations.

Why the Market Needs Innovation Exemptions

For years, the U.S. industry has operated in what many describe as “regulation through litigation” - a reactive environment in which enforcement frequently preceded guidance. This dynamic pushed entrepreneurs offshore and burdened new models with legal uncertainty.

The proposed exemptions aim to change that by enabling:

clear, time-limited relief from certain registration requirements;
the ability to test tokenization, staking and DeFi models under supervisory conditions;
simplified disclosure focused on governance, code audits and decentralization;
structured exit or transition pathways at the end of a pilot period;

CFTC Commissioner Kristin Johnson has reinforced this message, emphasising that DeFi introduces “qualitative differences” from traditional finance and requires an appropriately tailored regulatory approach.

Toward a U.S. Digital-Asset Sandbox

Although the full proposal has not yet been released, indications from the SEC point to a framework containing:

Key Elements Anticipated

Conditional Relief: Projects may operate under exemptive orders if they meet strict transparency and investor-protection criteria
Regulatory Sandbox: Time-limited pilots for DeFi protocols, tokenization models and staking systems
Simplified Reporting: Disclosure frameworks centred on validator rules, governance and code integrity
Sunset & Transition Rules: Clear obligations to register fully or wind down after the test period
Cross-Agency Alignment: Coordinated definitions and supervisory roles between the SEC, CFTC and FinCEN
Stronger Risk Controls: Standardised dashboards, attestations and enhanced custody segregation

The overall direction mirrors approaches taken in the UK, Singapore and parts of the EU, but with a U.S.-specific emphasis on investor protection and systemic safeguards.

Regulatory Roadmap: What Comes Next

The projected timeline, potentially affected by the recent 43-day U.S. government shutdown, is:

Nov 2025: SEC issues Notice of Proposed Rulemaking
Dec 2025 – Feb 2026: Public comment period; joint SEC–CFTC guidance
H1 2026: First sandbox pilots for tokenization and DeFi projects
Late 2026: Final rule adoption and permanent exemptive framework

If realised, this would signal a substantial shift in U.S. regulatory posture - from restrictive to facilitative.
From the standpoint of 3 Comma Capital, the introduction of U.S. innovation exemptions represents far more than a regulatory development - it potentially establishes the blueprint for a new global architecture of asset management.
These exemptions are not only relevant to crypto-native firms. They have the potential to reshape the underlying infrastructure through which fixed-income portfolios, balanced-allocation strategies, and digital-asset funds will operate in the next decade.

Conclusion

If implemented as anticipated, U.S. innovation exemptions could redefine how digital-asset markets and traditional finance interact. By replacing unilateral enforcement with structured supervision, regulators are opening the door to a more transparent, competitive and innovation-friendly global landscape.