SEC Chair Paul Atkins said the agency’s proposed crypto safe harbor framework has been sent to the White House for review. The proposal would let certain crypto projects operate in their early stages without immediate registration, and it is now under final examination by the Office of Information and Regulatory Affairs, part of the Office of Management and Budget.
Atkins disclosed the update on Monday at a digital asset summit hosted by Vanderbilt University and the Blockchain Association. He said the proposal first appeared last month and has now entered the last stage of the executive review process, with release expected in the near term.
Startup exemption centers on early fundraising
The most closely watched part of the proposal is the “Startup Exemption.” Under the plan, a crypto project could launch without registering right away and raise a set amount of capital over four years, as long as it meets required disclosure standards. The aim is to let crypto startups fund operations while keeping investor protection requirements in place.
Atkins also floated an “Investment Contract Safe Harbor.” That idea would work alongside the SEC’s token taxonomy guidance issued in March. For the crypto industry, that guidance carried weight because it was the first time the SEC formally spelled out the conditions under which a digital asset could be treated as a security.
Rulemaking moves ahead while Congress struggles on legislation
The SEC’s push comes as Congress is also trying to write crypto rules into law, though progress over the past year has been slow and difficult. Atkins said legislation is still necessary because regulators such as the SEC need legal authority that is, in his words, clear and durable.
His point was simple. Administrative rules can shift when political control changes or a new president takes office. A law passed by Congress carries more permanence. That leaves the SEC’s administrative efforts and congressional legislation moving on parallel tracks, not as substitutes for one another.
Innovation exemption sparks clash with traditional finance
The SEC is also developing an “Innovation Exemption,” described as something similar to a regulatory sandbox for onchain assets. It would allow firms to test new financial products and services in a controlled setting. That idea has triggered sharp debate over the past year between crypto advocates and traditional financial institutions.
Wall Street firms have argued that broad exemptions could weaken investor safeguards and market oversight. Citadel Securities has urged the SEC to use a formal notice-and-comment process for writing the rules. The Blockchain Association pushed back on Monday, saying such procedures are not always required, and that the SEC has used exemptive tools before and has lawful authority to do so. Atkins backed that view at the summit, saying the SEC does have the power to advance an exemption-based approach.