New Phase of Regulatory Game: CEEX Interprets the Impact of SEC's Innovation Exemption on the Global Crypto Industry

The End of the Bureaucratic Era: From Law Enforcement to Encouraging Innovation

In recent years, the attitude of U.S. regulators towards crypto assets has been like a roller coaster.
Former SEC Chairman Gary Gensler was known for his "regulation by enforcement" approach, relying on the 1946 Howey test to classify any token with fundraising purposes as a security, and he filed lawsuits against projects like Ripple. For example, in 2023, a court ruled that XRP was considered a security in institutional sales but not in the retail market. Even Coinbase, which had gone public through an SEC S-1 filing, was sued for "operating an unregistered securities exchange." Such contradictions have left the market in turmoil, coining the term "SEC effect": whenever a token is named as a security, its price often plummets, leading capital and developers to flee to more regulatory-friendly Europe and Asia.
After the change of government in the U.S. in 2025, there was a significant shift in policy direction. The new SEC Chairman, Paul Atkins, stated in an interview with CNBC that most crypto assets should not be classified as securities and proposed three major reforms: Token Classification Law, Crypto Projects, and Innovation Exemptions. He mentioned that most crypto assets are similar to commodities, collectibles, or utility tokens, and only a small number that meet the Howey test as investment contracts are true securities. With the new government withdrawing multiple lawsuits and directing the SEC and CFTC to work together on rule-making, the U.S. hopes to return to being a global center for crypto innovation.
Regarding innovation exemptions, Atkins promised to launch an "Innovation Exemption" sandbox in January 2026, which would allow projects to quickly test products within a limited timeframe without cumbersome registration, but they must publicly report operations, comply with KYC/AML rules, and implement investor protection measures. Public opinion suggests that this policy could give blockchain startups breathing room and reduce compliance costs. However, allowing issuers to screen user identities has been criticized by some decentralized communities as "against the open principle," and some DAOs are concerned that liquidity pools may be divided into licensed and unlicensed systems.

A Wake-Up Call: The Collapse of FTX and Regulatory Turning Point

The shift in regulatory direction is closely tied to past lessons.
In November 2022, one of the world's largest crypto exchanges, FTX, collapsed within days, with its empire, once valued at $32 billion, filing for bankruptcy. Founder Sam Bankman-Fried was subsequently arrested and faced multiple criminal charges. The media described this event as the "crypto Lehman moment," with millions of users' assets evaporating. Following this, regulatory agencies in Europe and the U.S. realized that unregulated exchanges could easily become incubators for Ponzi schemes. Reports indicated that each major crisis would prompt the introduction of new risk management standards, and society began to demand stricter regulatory frameworks.
The lessons from FTX prompted the U.S. government to initiate Crypto Sprint, requiring the SEC and CFTC to provide specific guidelines applicable to crypto assets. Meanwhile, Congress passed the GENIUS Act, which for the first time recognized compliant stablecoins as legitimate payment instruments. The U.S. Treasury revoked the SAB 121 regulation that prohibited banks from custodying crypto assets, allowing banks like Goldman Sachs and Citibank to hold clients' Bitcoin and Ethereum. These measures signify that the official stance is no longer solely about suppression but about redesigning the risk prevention system after learning from past mistakes.

The "Cat-and-Mouse Game" of Regulation and Innovation: Case Studies

Tighter regulation does not mean stagnation in the industry; on the contrary, some companies actively embrace compliance and turn it into a competitive advantage. Take Coinbase as an example: after being sued by the SEC, Coinbase developed efficient KYC/anti-money laundering technologies and sold these tools as "compliance as a service" to other institutions. Its reports show that by providing technical support to external companies, Coinbase's compliance business revenue grew by over 215%. This case proves that even in a harsh regulatory environment, companies can seek commercial value through innovative solutions.
Venture capital giant Andreessen Horowitz (a16z) also chose to be "proactive." They hired former CFTC Chairman Heath Tarbert as Chief Legal Officer, actively participating in policy-making and lobbying regulators for a more lenient regulatory environment for technologies like zero-knowledge proofs. This "revolving door" strategy not only secured a voice for their investment projects but also reflects the interests at play between regulation and industry.
Another interesting example comes from Tesla. Due to U.S. labor laws prohibiting companies from directly paying salaries in cryptocurrency, Musk's team exploited a loophole in an old California law that allows for "emergency prepayments," enabling employees to choose to receive part of their salary in the stablecoin USDC, which is then settled daily by a crypto exchange. This clever maneuver illustrates that innovative compensation schemes can be attempted within the regulatory framework, aligning with employees' interest in digital assets.

Global Perspective: The Regulatory Race in Europe, Asia, and Emerging Markets

The shift in U.S. policy is not an isolated event.
In Europe, the Markets in Crypto-Assets Regulation (MiCA) will take effect in 2024, providing unified rules for the entire EU. The European Securities and Markets Authority (ESMA) noted that companies providing crypto services before December 30, 2024, can continue to operate during a transition period, but member states can shorten the transition period to protect investors. MiCA requires digital asset service providers to disclose trading records, order books, and transparency data in a standard format and submit white paper information to ensure market order. Due to the varying implementation timelines across countries, scholars are concerned that regulatory arbitrage could lead to a "regulatory patchwork." Countries like Germany are shortening the transition period to capture market share, attracting more companies to apply for local licenses. This differential enforcement has prompted the EU to consider whether ESMA should oversee major platforms to prevent fragmentation from affecting competitiveness.
The UK has adopted the Financial Services and Markets Act (FSMA) to establish a multi-tiered regulatory framework. Its regulatory sandbox allows startups to test innovative products in a controlled environment, enabling regulators to gather data and adjust policies accordingly. In Asia, Singapore and Hong Kong have opened "regulatory sandbox" programs since 2020, issuing licenses for virtual asset trading platforms to attract exchanges. The Monetary Authority of Singapore approved a blockchain-based money market fund launched by InvestaX and Franklin Templeton, allowing retail investors to purchase tokenized short-term bonds and commercial papers. The shares of this fund are recorded on the blockchain, providing real-time transparency and daily liquidity. This example shows that Asian regulators prefer a "trial and error" approach to assess risks and benefits based on practical experience.
In emerging markets, the Pakistani government has also signed a memorandum of understanding with Binance to pilot the tokenization of $2 billion in sovereign debt and commodities. The country, on the edge of Western sanctions, aims to improve liquidity through tokenization and attract overseas capital, reflecting the strategy of emerging economies to break traditional constraints through financial innovation. While the U.S. and EU are still discussing regulatory frameworks, emerging markets have quickly embraced blockchain financing tools, a "leapfrogging" approach worth noting.

Outlook: In the Era of Regulatory Competition, Where Will Funds and Innovation Flow?

Looking back, the "innovation exemption" proposed by the U.S. SEC resembles a milestone in the global shift in crypto policy: moving from strict enforcement to classified regulation, temporary exemptions, and sandbox experiments. Policymakers are beginning to realize that simple blockades will only accelerate talent outflow and the expansion of gray areas; a more feasible approach is to delineate a workable boundary between investor protection and the pace of innovation.
The game is not over yet. Traditional financial institutions continue to enter the market, providing blockchain with broader application scenarios and bringing about a new balance of power: traditional giants like the Chicago Mercantile Exchange and the New York Stock Exchange are successively laying out related products; the World Federation of Exchanges is concerned that loosening regulations could undermine market integrity, advocating for the same set of rules to apply to traditional exchanges and DeFi platforms; while institutions like Citadel Securities call for stricter constraints on decentralized protocols, Uniswap's founder counters that excessive regulation would stifle open-source innovation. The very existence of these disagreements underscores the complexity of the new paradigm.
For the average reader, understanding the "innovation exemption" does not require delving into obscure texts. It can be imagined as a test field designated by the government, allowing seed projects to test new varieties within a limited timeframe and apply for formal admission once they mature. Regulators are willing to provide flexible space but will also erect fences—projects must continuously disclose operational progress and risks. As the details are finalized, the U.S. may see a return of projects, which could also prompt Eurasia to accelerate the introduction of benchmarking mechanisms, leading to the creation of a more universal regulatory template, guiding the crypto ecosystem towards a more standardized and inclusive phase.
For trading platforms, the opportunities brought by the regulatory competition often lie along the lines of "compliance implementation + frictionless experience." CEEX focuses on one-stop aggregation trading for all currencies, building a growth flywheel around "brokers," with the platform token CMC positioned as a carrier of exclusive rights for brokers, allowing mining to be open to brokers; the African market has initiated a co-construction plan, opening cooperation with local media, education, payment, and other partners, while advancing the application for the VASP license from Dubai VARA to secure a foothold in the Middle East's compliance channel. The new version of the app also prioritizes the broker application entry after registration and adds a "Broker Center" on the homepage and in the upper right corner, integrating mining center transfer/recharge and level data visualization to make upgrades and operations more convenient.