The era of bureaucracy comes to an end: from law enforcement to encouraging innovation.
Over the past few years, the attitude of US regulators toward crypto assets has been like a rollercoaster.
Former SEC Chairman Gary Gensler was known for his "regulation is enforcement" approach. He relied on the 1946 Howey Test to classify any token used for fundraising as a security and filed lawsuits against projects like Ripple. For example, in 2023, a court ruled that XRP was a security in institutional sales but not in the retail market. Even Coinbase, which had already gone public through an SEC S-1 filing, was sued for "operating an unregistered securities exchange." Such contradictions created a climate of fear in the market, known as the "SEC effect": whenever a token is designated as a security, its price often plummets, and capital and developers flee to more regulated Europe and Asia.
Following the change of government in the United States in 2025, a major shift in policy direction occurred. Newly appointed SEC Chairman Paul Atkins, in an interview with CNBC, stated that most crypto assets should not be classified as securities and proposed three major reforms: a token taxonomy , crypto projects , and an innovation exemption . He said that most crypto assets resemble commodities, collectibles, or instrumental tokens, and only a small fraction of investment contracts that meet the Howey Test are true securities. With the new administration dropping multiple lawsuits and directing the SEC and CFTC to work together on rule development, the United States hopes to reclaim its position as a global hub for crypto innovation.
Regarding innovation exemptions, Atkins has pledged to launch an "Innovation Exemption" sandbox in January 2026. This sandbox envisions allowing projects to quickly test their products within a limited timeframe, without cumbersome registration, but requiring them to publish operational reports, comply with KYC/AML rules, and implement investor protection measures. This policy is seen as providing breathing room for blockchain startups and reducing compliance costs. However, allowing issuers to screen user identities has been criticized by some in the decentralized community as "violating the principle of openness," with some DAOs concerned that liquidity pools will be divided into permissioned and permissionless systems.
A Wake-Up Call: The Collapse of FTX and a Regulatory Turning Point
The shift in regulatory direction cannot be separated from lessons learned from the past.
In November 2022, FTX , one of the world's largest crypto exchage, collapsed within days, its once-glorious empire 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 losing their assets. Following this, regulators in Europe and the United States realized that unregulated exchanges could easily become incubators for Ponzi schemes. Reports indicate that each major crisis pushes for new risk management standards, and society begins to demand a stricter regulatory framework.
The lessons learned from FTX prompted the US government to launch Crypto Sprint , requiring the SEC and CFTC to provide specific guidance applicable to crypto assets. Simultaneously, Congress passed the GENIUS Act , recognizing compliant stablecoins as legitimate payment instruments for the first time. The US Treasury Department revoked SAB 121, which prohibited banks from holding crypto assets, allowing banks like Goldman Sachs and Citigroup to hold their clients' Bitcoin and Ethereum. These moves signify that the government is moving away from indiscriminate suppression and instead redesigning its risk control system after learning from past lessons.
The "Cat and Mouse Game" Between Regulation and Innovation: Case Studies
Tighter regulations don't mean industry stagnation; on the contrary, some companies are proactively embracing compliance and turning it into a competitive advantage. Take Coinbase, for example. After being sued by the SEC, Coinbase developed efficient KYC/anti-money laundering technology and sold these tools as a "compliance-as-a-service" to other institutions. Their reports show that by providing technical support to external companies, Coinbase's compliance revenue grew by over 215%. This case demonstrates that even in a stringent regulatory environment, companies can still seek business value through innovative solutions.
Venture capital giant Andreessen Horowitz (a16z) also opted for a preemptive strike, hiring former CFTC Chairman Heath Tarbert as chief legal officer to actively participate in policy-making and lobby regulators for a more lenient regulatory environment for technologies such as zero-knowledge proofs. This "revolving door" strategy not only secures a voice for its own portfolio companies but also reflects the power struggle between regulators and industry.
Another interesting example comes from Tesla. Because US labor law prohibits companies from paying wages directly in cryptocurrency, Musk's team exploited a loophole in an older California law that allowed for "emergency advances," enabling employees to choose to receive a portion of their salary in the stablecoin USDC , which was then settled daily by a crypto exchage. This clever move illustrates that innovative compensation schemes can be explored within regulatory frameworks, catering to employees' interest in digital assets.
Global Perspective: The Regulatory Race in Europe, Asia, and Emerging Markets
The shift in US policy is not an isolated event.
In Europe, the Crypto Asset Markets Directive (MiCA) came into effect in 2024, providing unified rules across the EU. The European Securities and Markets Authority (ESMA) stated that companies offering crypto services before December 30, 2024, could continue operating during the transition period, but member states could shorten the transition period themselves to protect investors. MiCA requires digital asset service providers to disclose transaction records, order books, and transparency data in a standard format and submit white paper information to ensure market order. Due to the different implementation periods of the transition periods by various countries, scholars worry that regulatory arbitrage will lead to a "regulatory jigsaw puzzle." Countries like Germany, in order to seize market share, have shortened the transition period to attract more companies to apply for local licenses. This differentiated implementation has prompted the EU to consider whether ESMA should establish a unified regulatory platform to avoid fragmentation affecting competitiveness.
The UK employs 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, from which regulators gather data and adjust policies. In Asia, Singapore and Hong Kong have launched regulatory sandbox programs since 2020, issuing licenses to virtual asset trading platforms and attracting exchanges to relocate. 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 paper. The fund's shares are recorded on the blockchain, providing real-time transparency and daily liquidity. This example demonstrates that Asian regulators tend to favor a "trial and error" approach, assessing risks and returns based on practical experience.
In developing markets, the Pakistani government has also signed a memorandum of understanding with Binance to pilot the tokenization of $2 billion worth of sovereign debt and commodities. Located on the edge of Western sanctions, Pakistan is using tokenization to improve liquidity and attract overseas capital, demonstrating the strategy of emerging economies to break through traditional limitations through financial innovation. While the US and EU are still discussing regulatory frameworks, emerging markets have quickly embraced blockchain financing tools; this "leapfrog development" is noteworthy.
Looking ahead: In an era of regulatory race, where will capital and innovation flow?
Looking back, the "innovation exemption" introduced by the U.S. SEC is more like a signpost for a shift in global crypto policy: from hardline enforcement to categorized regulation, temporary exemptions, and sandbox trials. Policymakers are beginning to realize that simple blocking will only accelerate the outflow of talent and the expansion of gray areas; a more feasible approach is to draw a workable line between investor protection and the pace of innovation.
The game is far from over. The continued entry of traditional financial institutions has broadened the application scenarios for blockchain and brought about a new balance of power: traditional giants such as the Chicago Mercantile Exchange and the New York Stock Exchange have successively launched related products; the World Federation of Exchanges worries that deregulation will weaken market integrity and advocates applying the same set of rules to traditional exchanges and DeFi platforms; while institutions such as Citadel Securities are demanding stronger constraints on decentralized protocols, the founder of Uniswap argues that excessive regulation will stifle open-source innovation. These disagreements themselves are a testament to the complexity of this new paradigm.
For the average reader, understanding the "innovation exemption" doesn't require delving into obscure regulations. Think of it as a government-designated testing ground, allowing seed projects to test new varieties within a limited timeframe, and then apply for formal approval once mature. Regulators are willing to provide flexibility, but they will also erect barriers—projects must continuously disclose operational progress and risks. As the detailed rules are implemented, the US may see a return of projects, and it may also accelerate the introduction of benchmarking mechanisms in Europe and Asia, thereby fostering more universal regulatory templates and leading the crypto ecosystem towards a more standardized and inclusive stage.
For trading platforms, the opportunities brought about by the regulatory race often lie in two areas: "compliance implementation + improved user experience and reduced friction." CEEX focuses on one-stop multi-currency aggregated trading, building a growth flywheel around "brokers." Its platform token, CMC, is positioned as the exclusive rights carrier for brokers, and mining is open to them. In the African market, a co-development plan has been launched, opening up cooperation to local media, education, and payment partners. Simultaneously, it is advancing its VASP license application with Dubai's VARA, securing a leading position in the Middle East compliance channel. The new app also prioritizes the broker application entry after registration and adds a "Brokerage Center" to the homepage and upper right corner. The mining center integrates transfer/deposit and level data visualization, making upgrades and operations more convenient.
