The US Securities and Exchange Commission (SEC) is grappling with how to regulate the decentralized finance (DeFi) sector, a complex challenge due to its unique nature. The SEC’s chairman, Paul Atkins, acknowledged that applying current rules aimed at intermediaries to DeFi systems is not straightforward.
To address this issue, panelists proposed three key areas for regulation: common activities, disclosure rules, and risk identification. They emphasized the need to focus on the activities taking place around DeFi protocols, rather than the underlying technology. This approach allows regulators to target specific behaviors without stifling innovation.
Disclosure rules were also highlighted as crucial, particularly in cases where off-chain agreements may distort market activity. Panelists suggested that investors and operators should have access to material information about these deals.
Risk identification was another critical aspect, with regulators needing to consider cyber risk, system management risk, and illicit finance. Experts agreed that mechanisms for addressing these risks must be developed and cataloged.
The SEC is exploring an “innovation exemption” framework, which would allow DeFi products and services to operate on-chain without registration. This approach acknowledges the need for regulatory flexibility in this emerging sector.
Source: https://www.axios.com/2025/06/10/defi-roundtable-crypto