The U.S. Securities and Exchange Commission (SEC) is preparing to introduce a long-awaited “innovation exemption” for crypto firms.
After years of tension between Washington and the digital-assets sector, the agency now appears ready to formally open the door to on-chain products built within the U.S., not offshore.
SEC Chair Paul Atkins said on Dec. 2 that the regulator is “on track” to roll out an innovation exemption for crypto activities, expected in January following delays from the recent government shutdown.
“I’m looking forward to having an innovation exemption that we’ve been talking about now. We’ll be able to get that out in a month or so, is what I’m hoping,” Atkins told CNBC’s Squawk Box.
He added that the shutdown “impeded” progress but said the agency is working with Congress by providing technical assistance on pending digital-asset legislation.
The exemption is designed to let crypto firms launch certain on-chain products more easily while still operating under formal SEC oversight.
The move marks the clearest break yet from the stance of former Chair Gary Gensler, whose enforcement-first approach was widely criticized by US crypto companies.
The development lands just weeks after major stock exchanges urged the SEC not to grant time-limited exemptive relief to crypto trading platforms offering tokenized stocks.
In a Nov. 21 letter, the World Federation of Exchanges, whose members include Nasdaq, Cboe and CME Group, warned that exemptions could “dilute” existing investor protections and “distort” competition by giving crypto exchanges a regulatory shortcut unavailable to traditional markets.
The group argued that granting legitimacy to tokenized stocks before full compliance would have “negative and acute consequences” for US market structure.
Tokenized stocks turn traditional equities into blockchain-based assets, letting users trade fractions of shares around the clock.
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Those warnings directly targeted the very framework Atkins is now finalizing, highlighting a widening rift between Wall Street incumbents and digital-asset venues seeking recognition.
The SEC’s pivot also mirrors a broader reorientation among major financial institutions that are now treating digital assets as a strategic, rather than fringe, allocation.
Bank of America (BAC) reportedly told wealth clients that crypto exposure now “belongs in every portfolio,” recommending a 1%-4% allocation depending on risk tolerance.
Morgan Stanley delivered a similar message.
In an early October note, the bank’s global investment committee advised financial advisers and clients that 2%–4% of a portfolio could be allocated to crypto, describing it as a “speculative but increasingly popular asset class that many investors, but not all, will seek to explore.”
Even firms previously resistant to the space are shifting.
On Dec. 1, Bloomberg reported that Vanguard will begin allowing selected crypto ETFs and mutual funds on its platform starting Tuesday – a reversal from its long-standing stance of blocking Bitcoin products entirely.
Together, these shifts illustrate that the largest US financial institutions are normalizing crypto as a standard portfolio component.
That trend dovetails with Atkins’ argument that the United States must “embrace this new area of innovation” instead of allowing the sector to migrate offshore.
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This story was originally published by TheStreet on Dec 2, 2025, where it first appeared in the Policy section. Add TheStreet as a Preferred Source by clicking here.