In early 2025, the SEC intensified its oversight of digital assets by establishing a dedicated Crypto Task Force. This interdisciplinary unit, comprising 14 professionals from across the agency, including individuals with close industry familiarity, was charged with identifying gaps in the regulatory framework, modernizing standards for custody and disclosure, and refining enforcement mechanisms to suit the evolving digital economy.

The initiative extends the SEC’s growing emphasis on proactive crypto engagement, following a period of public consultation that yielded over 100 submissions ranging from abstract theorizing to detailed legal reform proposals.

To deepen its understanding with on-the-ground expertise, the agency launched a series of thematic roundtables convening a wide spectrum of participants: from technologists to legal academics and incumbents in traditional finance. The latest event, titled “DeFi and the American Spirit,” explored how decentralized finance challenges and complements existing regulatory models. 

Statements from regulators

Commissioner Mark Uyeda cast the SEC’s engagement with decentralized finance as a pioneering endeavor, likening it to historical American expeditions into the unknown. Acknowledging past missteps in the Commission’s opaque approach to emerging technologies, Uyeda emphasized the importance of structured public dialogue and analytical rigor in reshaping outdated rulebooks.

In his view, the Crypto Task Force’s shift toward constructive engagement via roundtables and stakeholder consultations marks a significant change in posture. While progress will be gradual, Uyeda underscored the value of transparency and process in building a legal infrastructure that balances innovation with investor protection.

“This SEC is committed to high quality regulation. High quality regulation takes time and administrative processes matter. For those who are involved in the development of DeFi, please be patient and work with the Commission and its staff towards achieving the best possible outcome,” Uyeda said.

He called for the agency to resist the inertia of legacy assumptions, especially regarding intermediaries, and to open regulatory space for peer-to-peer systems that bypass traditional gatekeepers.

“High quality regulation takes time and administrative processes matter … please be patient and work with the Commission and its staff towards achieving the best possible outcome.”

Mark Uyeda, SEC Commissioner

Commissioner Caroline Crenshaw approached the roundtable series with caution, warning against over-simplifying crypto’s complexity in the name of speed. In her view, the diversity of viewpoints, ranging from DeFi maximalists to legacy market actors, exposed the limitations of the current regulatory framework and underscored the impossibility of one-size-fits-all guidance.

Crenshaw emphasized that meaningful regulatory clarity must come through formal rulemaking processes, with adequate public input and legal precision. She cautioned against rushing to accommodate industry demands without ensuring sufficient safeguards for retail investors and systemic stability.

Her remarks suggested that the SEC’s future crypto agenda will be shaped less by market momentum and more by careful deliberation on jurisdictional thresholds and institutional responsibilities.

Long a critic of heavy-handed crypto enforcement, Commissioner Hester Peirce used the final roundtable to underscore the constitutional boundaries of SEC authority.

Peirce framed DeFi not merely as a technological shift but as an ideological one, an assertion of transactional freedom rooted in peer-to-peer networks and open-source code. She highlighted the First Amendment implications of regulating software developers for merely publishing code that others may use in securities-like activities.

“Also resonant with the American spirit is the ability of people to publish written material without permission. Code is protected speech. Because the First Amendment protects someone who writes a DeFi software protocol and publishes it, the SEC has no authority to demand pre-publication approval rights even for code that could be used to exchange securities. The SEC must not infringe on First Amendment rights by regulating someone who merely publishes code on the basis that others use that code to carry out activity that the SEC has traditionally regulated,” said Peirce.

Peirce distinguished between code authorship and operational control, arguing that only those who intermediate or administer client-facing activities warrant regulatory scrutiny. Her comments reinforced a minimalist vision of SEC jurisdiction in DeFi, targeting centralized actors while preserving the autonomy of decentralized systems and their creators.

Chairman Paul Atkins presented the most forward-leaning regulatory vision, advocating for foundational changes to accommodate decentralized protocols.

He endorsed the idea of a conditional “innovation exemption” to allow compliant experimentation with on-chain financial systems, bypassing existing bottlenecks in registration and custody rules.

“While the Commission and its staff work to propose fit-for-purpose rules of the road for on-chain financial markets, I have directed the staff to consider a conditional exemptive relief framework or ‘innovation exemption’ that would expeditiously allow registrants and non-registrants to bring on-chain products and services to market,” Atkins announced.

Atkins highlighted the resilience of self-executing code during market disruptions and criticized legacy interpretations that conflate software development with brokerage functions. Emphasizing property rights and market-based coordination, he framed blockchain as an extension of American liberal economic principles.

His remarks suggested a regulatory architecture that pivots from intermediaries to protocols, calling for rule amendments and staff guidance that reflect this paradigm shift and position the US as a crypto innovation hub.

“I have directed the staff to consider a conditional exemptive relief framework or ‘innovation exemption’ that would expeditiously allow registrants and non-registrants to bring on-chain products and services to market.”

SEC Chairman Paul Atkins

Activity-based oversight

Moderated by former SEC Commissioner Troy Paredes, the panel featured senior representatives from blockchain protocol developers, academic institutions, investment firms, and advocacy organizations. The discussion focused on how DeFi’s structural divergence from traditional finance complicates established regulatory models and compliance expectations.

The discussion opened with remarks by Rebecca Rettig from Jito Labs, who argued that compliance frameworks should prioritize specific activities and their attendant risks, rather than relying on ill-defined classifications such as “DeFi” or “centralized.”

She delineated three principal risk categories: cybersecurity vulnerabilities inherent in self-executing code, system governance risks posed by actors holding operational controls (for exaample, via multi-signature wallets), and illicit finance concerns emerging from usage patterns.

Rettig proposed that assessing control and intent in particular functional contexts, rather than in blanket categorizations of software or platforms, would allow regulators to target conduct that warrants oversight, without infringing on constitutionally protected speech, such as the publication of open-source code.

Peter Van Valkenburgh from Coin Center elaborated on this boundary, emphasizing that any regulatory posture must be constrained by First Amendment protections. He warned that even well-intentioned risk-based frameworks must avoid collapsing into conduct policing that compromises foundational legal protections.

Michael Mosier from Arktouros addressed the inadequacy of legacy compliance tools in the context of high-speed, decentralized networks. Citing past FinCEN guidance, he distinguished between value transmission and data transmission, arguing that many DeFi protocols resemble public communications infrastructures more than financial intermediaries.

He advocated for compliance frameworks that utilize cryptographic tools such as zero-knowledge proofs to verify regulatory requirements, such as KYC, accreditation, or sanctions exclusion, without creating new vectors for privacy violations or systemic cyber risk.

Smart contracts

Several participants framed smart contracts as embedded compliance mechanisms. Erik Voorhees from Venice AI, Omid Malekan from Columbia Business School, and Michael Jordan from DBA argued that programmable systems offer a more predictable and egalitarian method of enforcing financial rules than human intermediaries.

While Kevin Werbach from Wharton School cautioned against idealizing software as “perfect regulators,” he acknowledged that blockchains diffuse trust structures and eliminate centralized points of failure.

The regulatory opportunity, he suggested, lies in identifying the kinds of risk (technical, operational, legal, or emergent) that warrant oversight and then designing interventions consistent with constitutional limits and practical enforceability.

On the investor side, Jordan articulated the compliance friction faced by responsible protocol developers and venture capital. He warned that regulatory opacity and misaligned incentives often reward bad actors willing to skirt best practices.

Gabe Shapiro from MetaLeX proposed enhanced disclosure obligations only where off-chain activities, such as validator agreements or market-making incentives, create material conflicts of interest.

The discussion closed with a strong warning against regulatory overreach. Jill Gunter from Espresso Systems, along with Jordan, noted the departure of high-quality crypto entrepreneurs from the US as a direct result of legal uncertainty and the perceived hostility of US oversight.

The risk, they argued, is not merely that innovation will be chilled, but that the most transparent and scrupulous actors will exit, leaving the field to less compliant players.

Panelists converged on the view that effective compliance in DeFi requires moving beyond institution-based frameworks toward activity-specific analysis, grounded in a realistic understanding of blockchain architecture, legal rights, and user behavior.

Rethinking enforcement

The second panel of the roundtable shifted the conversation from compliance mechanics to questions of institutional design, enforcement philosophy, and regulatory evolution.

The discussion was framed not as an attempt to perfect DeFi regulation, but rather as a pragmatic inquiry into how, and whether, current law can be coherently extended into an ecosystem characterized by code-mediated governance, anonymous participation, and mutable control structures.

Much of the early discussion revolved around the concept of functional equivalence. A former CFTC Commissioner argued that existing rules, though not written with decentralized systems in mind, often remain applicable when actors perform economically equivalent roles, such as custody, execution, or market-making.

However, several panelists warned that analogizing too quickly between centralized and decentralized structures may obscure rather than clarify regulatory gaps. They called for more empirical work to assess the risk surface of DeFi systems, noting that volatility, code vulnerabilities, and incentive misalignments may emerge in forms not easily mapped onto traditional categories like broker-dealer or clearing house.

Some participants argued that enforcement alone cannot sustain investor protection in a permissionless ecosystem. They suggested that any viable approach would need to blend traditional rulemaking with technological adaptation, such as embedding compliance into user interfaces or wallets, effectively creating “regulation by design” rather than by litigation.

Several panelists underscored the First Amendment implications of regulating open-source code and public blockchain infrastructure.

The distinction between publishing software and operating a platform was once again central. They agreed that regulatory legitimacy hinges on targeting conduct, not authorship.

“Because the First Amendment protects someone who writes a DeFi software protocol and publishes it, the SEC has no authority to demand pre-publication approval rights even for code that could be used to exchange securities.”

Hester Peirce, SEC Commissioner

At the same time, there was broad consensus that when developers go beyond publishing, by controlling front ends, aggregating user data, or extracting fees, they may cross the threshold into regulated activity.

The panel concluded on a cautiously optimistic note. Participants acknowledged that DeFi presents real challenges to statutory interpretation and institutional capacity. Yet several emphasized that these challenges also offer an opportunity to modernize regulatory paradigms.

Roundtables in summary

The June 9 discussion on DeFi served as the culminating event in the SEC’s five-part Crypto Task Force roundtable series, each installment laying a critical foundation for rethinking the role of regulation in the age of decentralization. Below is a recap of the four preceding sessions that collectively informed the agency’s evolving posture toward crypto markets.

The inaugural session, “How We Got Here and How We Get Out – Defining Security Status,” convened March 21 under Commissioner Hester Peirce’s leadership to address the fundamental question: which digital assets qualify as securities?

On April 11, “Between a Block and a Hard Place: Tailoring Regulation for Crypto Trading” focused on how trading platforms fit into existing US regulatory models. Key themes included broker‑dealer registration, custody protection, cross‑border oversight, and investor safety.

Held in late April, the third session drilled into custody arrangements, revealing a relatively unified stance on protecting consumers but significant disagreement over how to regulate self‑custody solutions.

The May 12 session, “Moving Assets On‑chain: Where TradFi and DeFi Meet,” tackled tokenization as the convergence point for traditional finance and decentralized networks. Regulators focused on three priority areas, issuance, custody, and trading, while affirming the role of contingent guidance pending formal rulemaking.

Digital asset regulatory architecture

The SEC’s Crypto Task Force roundtable series arrives at a moment of intensifying policy experimentation around blockchain governance across the US legal landscape.

Parallel efforts, such as the proposed Clarity for Payment Stablecoins Act in the House and the Responsible Financial Innovation Act in the Senate, underscore the shift from enforcement-first strategies toward rulemaking that defines jurisdictional boundaries and operational standards for emerging asset classes.

Both bills reflect a push to recognize stablecoins as critical infrastructure for dollar-denominated digital finance, while clarifying the respective roles of the SEC, CFTC, and OCC.

Meanwhile, state-level initiatives such as Wyoming’s legal recognition of DAOs as limited liability entities and the nationwide adoption of Article 12 of the Uniform Commercial Code to treat digital tokens as property signal deeper structural change.

Across policy arenas, regulators are testing ways to distinguish software developers from service providers, and open-source publishing from financial intermediation.

While much about blockchain remains uncertain, from the classification of tokens to the contours of decentralized governance, regulators are beginning to chart a more deliberate course through the fog.

The SEC, often criticized for lagging behind the pace of innovation, has instead opted for incrementalism: cautious, consultative, and grounded in legal tradition. It is, in essence, a journey measured not in dramatic leaps but in regulatory footholds.

As the Chinese proverb suggests, a journey of a thousand miles begins with a single step, and the SEC, through roundtables, task forces, and steadily evolving enforcement strategy, appears to be taking those first steps with growing purpose.