INSIGHT

SEC’s Innovation Exemption for Crypto: What This Regulatory Shift Means for Your Business 

Javier Salinas, Ryan Davis • December 15, 2025

Industries: Blockchain & Digital Assets

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After years of regulatory uncertainty, the U.S. Securities and Exchange Commission is preparing to introduce a framework under their “Project Crypto” that could fundamentally reshape the crypto industry, reshore crypto businesses that fled the U.S, and establish a more robust regulatory framework for crypto in the U.S. Project Crypto is expected to provide clear guidelines to use in determining whether a crypto asset is a security or subject to an investment contract. Project Crypto follows President Trump signing the GENIUS Act in to law, which helps ensure that the U.S. will continue to lead the world in global payments with a stablecoin regulatory framework. 

SEC Chair Paul Atkins recently confirmed that the agency is “on track” to release an innovation exemption for crypto activities, expected in January 2026. This marks the clearest signal yet that federal regulators are moving toward a more defined, accessible framework for crypto assets and blockchain technology, rather than the enforcement-first approach that characterized recent years. 

Understanding Project Crypto and the Innovation Exemption 

The proposed exemption would allow crypto firms to launch certain blockchain-based products more easily while still operating under formal SEC oversight. Rather than forcing companies offshore to navigate uncertain regulatory waters, this framework aims to keep innovation and economic activity within U.S. borders. 

Chair Atkins stated the agency is providing technical assistance to Congress on pending crypto asset legislation, suggesting a coordinated approach between regulatory bodies. While the recent government shutdown delayed the timeline, the SEC appears committed to finalizing this framework within weeks. 

In his speech, Paul Atkins, Chairman of the SEC, highlighted that he has:  

• Directed the Commission staff to develop a framework that will allow non-security crypto assets and crypto asset securities to be traded side-by-side on SEC-regulated platforms. 
• Asked the staff to evaluate the use of Commission authority to permit non-security crypto assets that are subject to an investment contract to trade on trading venues that are not registered with the Commission.  

Mr. Atkins also envisions an innovation exemption, permitting innovators and visionaries to enter the U.S. market with new technologies and business models without compliance with incompatible or burdensome prescriptive regulatory requirements that hinder productive economic activity. Instead, the innovator will comply with certain principles-based conditions designed to achieve the core policy aims of the federal securities laws.  

Under the direction of Mr. Atkins, the SEC will pursue such a solution to enable state-licensed crypto asset platforms that are not registered with the SEC to list certain crypto assets, as well as clear the way for CFTC-regulated platforms to offer these products with margin capabilities. 

What Makes This Different 

This represents a significant departure from previous regulatory strategy. The innovation exemption would provide: 

• Clearer compliance pathways for companies exploring blockchain-based products 
• Formal oversight structures that reduce regulatory ambiguity 
• Competitive positioning for U.S.-based firms versus offshore alternatives 
• Defined parameters for tokenized assets and on-chain products 

However, the move hasn’t been universally welcomed. Major stock exchanges warned in November that exemptions could “dilute” investor protections and create competitive imbalances by giving crypto platforms regulatory advantages unavailable to traditional markets. 

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How Major Financial Institutions Are Responding 

While concern has been expressed by some businesses and market participants, the largest U.S. financial institutions are signaling a notable shift in their approach to crypto assets and blockchain technology.  

• Blackrock’s CEO Larry Fink is on record that he would like to see the SEC rapidly approve tokenization of bonds and stocks.  
• Robinhood launched tokenized versions of U.S. stocks and ETFs for European customers, starting in June 2025.   
• Large banks such as Bank of America and Morgan Stanley have reportedly advised clients to allocate 1% – 4% of portfolios to crypto.  
• In December 2026, JP Morgan Chase arranged a $50M short-term bond on the Solana blockchain.  

What This Means for Your Business 

Federal regulators are moving toward a more defined, accessible framework for crypto assets and blockchain technology, ensuring that frameworks are built to maintain U.S. dominance in crypto asset markets. In the very near future, we should see rules for crypto asset distributions, custody, and trading for public notice and comment.  

Strategic Planning Opportunities 

For businesses exploring crypto assets or blockchain technology, the innovation exemption could open new possibilities: 

Operational Applications: Blockchain technology offers potential benefits for supply chain management, smart contracts, and transaction processing. A clearer regulatory framework may make these applications more viable for risk-conscious businesses. 

Investment Decisions: As institutional guidance normalizes crypto allocations, business owners and executives need to evaluate whether crypto assets align with their treasury management strategy and risk tolerance. 

Competitive Positioning: Companies in fintech, financial services, or technology sectors may need to assess how competitors are leveraging blockchain technology and whether the new framework creates strategic opportunities. 

The Tokenized Securities Question 

One particularly significant aspect involves tokenized stocks—traditional equities converted into blockchain-based assets that can be traded fractionally around the clock. While this technology could democratize access to equity markets, it also raises complex questions about: 

• Market structure and after-hours trading implications 
• Fractional ownership rights and shareholder protections 
• Cross-border transaction considerations 
• Integration with existing accounting and financial reporting systems 

Planning for 2026 and Beyond 

The January timeline means businesses have limited time to prepare for potential changes. Working with advisors who understand both the tax implications and the strategic considerations can help you position your business appropriately as regulations crystallize. 

This is particularly important because initial guidance often creates as many questions as it answers. Having a plan in place—and trusted advisors who can help navigate emerging details—will be more valuable than attempting to address everything reactively after the framework launches. 

Moving Forward with Confidence 

The SEC’s Project Crypto innovation exemption represents a significant moment in U.S. crypto asset and blockchain regulation. Whether it ultimately delivers on its promise of regulatory clarity while maintaining investor protections remains to be seen, but the trajectory toward more defined frameworks appears clear. 

For businesses, this is a time to stay informed, assess implications thoughtfully, and position strategically. The regulatory landscape is evolving rapidly, and understanding how these changes affect your specific situation will be increasingly important in 2026. 

Need guidance on how cryptocurrency regulations and crypto asset considerations affect your business? BPM’s tax and advisory professionals can help you navigate the evolving regulatory landscape and develop strategies that align with your business objectives. Contact us to discuss your specific situation.