SEC Chair Sets New Timeline to Pass Innovation Exemption for Crypto Firms After Gov Shutdown

U.S. SEC Chair Paul Atkins has given his clearest update yet on the agency’s upcoming innovation exemption for crypto firms. 

In a discussion on CNBC’s Squawk Box, Atkins said the SEC plans to publish the framework within the next month, even though the recent government shutdown slowed the process. 

SEC Chair Speaks on Innovation Exemption Timeline

Notably, during the interview, host Joe Kernen questioned whether the SEC can make real progress on crypto regulation without new legislation and if that progress can happen before the end of the year. 

In response, Atkins explained that the SEC continues to work with Congress and gives lawmakers technical guidance on upcoming bills, so they stay aligned with existing rules. 

He emphasized that this cooperation matters but also stated that the SEC already holds enough authority to move forward. While Atkins failed to provide a timeline on when Congress might act, he made it clear that the SEC does not plan to wait for new laws before taking action.

The SEC Chair then turned to the innovation exemption, which he described as one of the agency’s main priorities. He said he expects the SEC to release the exemption “in a month or so,” aligning with earlier projections.

For context, the government shutdown temporarily stopped the team from working on it, since staff could not continue during that period. Now that the shutdown has ended, Atkins says the agency has returned to its schedule and continues to move ahead. 

He stressed that the exemption seeks to open the door for crypto developers to build and test new products inside a clear and supportive regulatory setup. According to him, the United States spent too many years pushing away blockchain innovation, and he wants rules that help the sector grow instead of holding it back.

What is the Innovation Exemption for Crypto Firms?

For the uninitiated, the innovation exemption is a proposal that gives temporary relief from full securities registration and certain compliance rules for crypto companies, blockchain projects, fintech startups, and other firms that offer on-chain services. 

It creates a supervised testing environment where eligible firms can experiment with tokenized assets, DeFi services, staking programs, token launches, and other blockchain-based tools. 

In return, these companies must follow strict disclosure standards, protect investors, and operate under SEC oversight. The goal is to reduce legal uncertainty for developers while the SEC works on long-term rules designed specifically for digital assets.

The idea started after the leadership transition earlier this year. Notably, former Chair Gary Gensler focused instead on strict enforcement, arguing that existing laws already covered most crypto assets. 

A Refreshing Outlook for the Industry 

Atkins, who took office in April 2025 and has long supported crypto-friendly modernization, has treated the exemption as a way to undo four years of strict rules that pushed developers overseas.

Throughout the year, he linked the exemption to several larger SEC initiatives. In June, he told staff at the SEC’s Crypto Task Force Roundtable to explore a conditional relief system for on-chain products. 

Meanwhile, he later connected the exemption to Project Crypto, the SEC’s broader effort to update market rules for blockchain-based systems. Atkins had also stated in October that the agency expects to start the formal rulemaking process by late 2025 or early 2026. 

Notably, industry leaders have welcomed his push, although groups like SIFMA recently warned that the exemption must be properly designed to avoid harming market stability.