Our friend Paul Atkins, the former SEC Commissioner, delivered a terrific speech. His remarks suggest a move towards regulatory clarity for the still-nascent, but rapidly growing decentralized finance (DeFi) industry. Atkins defined what some might call the “American DeFi thesis” in no uncertain terms. He rooted his industry arguments in core American principles and positioned DeFi as an expression of the financial innovation Americans value. He even spoke to the foundational issues, such as how blockchain validators and stakers should be treated. In addition, he signed an executive order instructing his staff to develop the outline for an “innovation exemption.” This speech happened right as the GENIUS stablecoin bill is making its way through Congress.
Championing DeFi's American Spirit
Atkins wasn’t shy about announcing his desire to make America the “crypto capital of the planet.” He argues that DeFi is the best example of all that is “the American spirit.” It’s designed to show that he’s setting a new tone, one that is a total 180 from the approach of his predecessor. He advocates a more permissive regulatory environment that fosters innovation.
Atkins contrasted the stability of decentralized protocols with centralized platform failures, lauding decentralized protocols’ resilience during recent market stress. While imperfect, this comparison does help illustrate his deep conviction about the innate, fundamental DeFi advantages. He views it as an opportunity to build a more resilient and sound financial system.
Addressing Key Industry Concerns
Atkins addressed one of the industry's most persistent pain points: the treatment of blockchain validators and stakers. He dismissed the notion that making code public is broker activity. He contrasted code developers with automakers, arguing the latter don’t have any liability for the ways third parties deploy their products.
He went on to claim that specifically, the operations of mining, validating, and staking-as-a-service would be exempt from federal securities laws. This much welcome clarification brings a level of regulatory certainty to those engaged in these activities and promotes the continuation of new innovations.
"The right to have self-custody of one's private property is a foundational American value that should not disappear when one logs onto the internet" - Atkins
In fact, Atkins’ statements seem like a digital rights manifesto. They emphasize the need for agency and ownership over our digital experiences and identities. Most importantly, he places a focus on self-custody. This model is a perfect fit for the fundamental tenets of DeFi, allowing users to gain complete control over their assets.
The Path Forward: Innovation Exemption Framework
Atkins has instructed his staff to craft an “innovation exemption” framework. This latest action reflects a dynamic, forward-thinking regulatory approach that places innovation – and its benefits – squarely at the center. This framework aims to provide a clear and predictable path for DeFi projects to operate within the existing regulatory landscape.
"The American values of economic liberty, private property rights, and innovation are in the DNA of the DeFi movement" - Atkins
By framing DeFi within the context of American values, Atkins is appealing to a broader audience and building support for a more favorable regulatory environment. His arguments speak to those who know that true justice lies in the freedom of individuals to pursue their economic opportunity on their own terms.
