SEC New Rule Countdown: How Will the "Innovation Exemption" Drive Coinbase's Acquisition Strategy?

Original author: Eric, Foresight News

On the morning of December 2nd local time, Paul Atkins, Chairman of the U.S. Securities and Exchange Commission (SEC), confirmed in a speech at the New York Stock Exchange that the innovation exemption rule for cryptocurrency companies has been included in the 2026 roadmap and will officially take effect in January next year.

Cryptocurrency itself was not the core topic of this speech. Paul Atkins chose to speak at the NYSE to lower disclosure requirements for innovative businesses, reduce mandatory disclosures and downsizing requirements based on company size, making it easier for smaller companies to go public. Furthermore, Paul Atkins also hopes to promote the "depoliticization" of shareholder meetings, shifting the focus to company operations.

Paul Atkins believes that current regulatory requirements for disclosure are too complex and that the focus should be on "financial significance." Bloomberg interprets Atkins's statement as an indication that the Trump administration opposes shareholder-led initiatives that emphasize environmental, social, and governance (ESG) measures and that disclosures in this area should be reduced.

The reason for mentioning this seemingly unrelated information is that the specific terms of the innovation exemption rules for cryptocurrency companies have not yet been published. However, we can draw some simple conclusions from the listing of several Web3 companies this year and the attitude of the new Federal Reserve Chairman:

First, the new SEC leadership is not intentionally "relaxing regulations," but rather aims to remove outdated and cumbersome rules from the existing regulations, thereby reducing compliance costs for companies. Multiple US media reports have mentioned that Paul Atkins wants to reduce "mandatory disclosure" requirements but will require an increase in the weighting of "financial materiality" information. The IPOs of crypto companies such as Circle and Bullish precisely reflect this trend.

As for "exemptions," the U.S. Securities Law has long had clear provisions, which essentially refer to special circumstances that allow for exemption from complex registration processes. Many previous token issuances utilized these exemptions and had to meet a series of requirements before they could be listed on exchanges such as Coinbase and Kraken to be available to U.S. retail investors.

However, meeting the requirements of these exemption policies is itself a very complicated matter. I learned from an insider that Zksync had wanted to issue tokens for a long time, but for a project of this size, in order to avoid regulatory trouble, it underwent very complex adjustments to its organizational structure, and finally successfully issued tokens while ensuring full compliance.

All of these examples share a common premise: that tokens are still defined as securities in some sense. However, the new exemption policy may bring about some changes.

On November 12th, US time, Paul Atkins stated in a speech at the Federal Reserve Bank of Philadelphia that Project Crypto will "draw clear lines" to differentiate between different types of crypto assets. Paul Atkins categorized crypto assets into four types:

• Digital goods or network tokens: their value comes from a fully functional and decentralized network, not from promises made by management.
• Digital collectibles: NFTs and similar items purchased for use or appreciation, not for profit;
• Digital tools: utility tokens that provide access or credentials;
• Tokenized securities: a form of traditional financial instrument based on blockchain.

Paul Atkins argues that the first three do not constitute securities. However, directly opening up a new asset class that is not a security but closely resembles one would obviously pose significant risks. Therefore, the "innovation exemption" for cryptocurrency companies has emerged, which may resemble a regulatory sandbox, allowing the SEC to explore the final regulatory approach through a period of "light regulation."

Due to the impact of the government shutdown, the full exemption rules are expected to be released when the shutdown takes effect. Currently, publicly available information is very limited, but the author has still managed to find some clues regarding the exemption clauses.

In its comment letter published on April 13, 2025, the SEC mentioned provisions from an earlier version of the exemption proposal: The proposed exemptions would be used for ICOs to facilitate early-stage fundraising for blockchain projects. It would also include implementing a mandatory basic registration system to ensure oversight of exempted entities and prevent abuse. Furthermore, the SEC would establish public verification tools to enhance transparency and investor protection.

Additionally, in his November 12th speech on Project Crypto, Paul Atkins mentioned: "In the coming months, as envisioned in current congressional legislation, I hope the committee will consider a set of exemptions to create a tailored issuance regime for crypto assets that are part of or bound by investment contracts. I have asked staff to prepare recommendations to promote capital formation and accommodate innovation while ensuring investor protection."

Clearly, the exemption measures that will take effect in January next year should be an extension of the exemption requirements of the Securities Law, or at least independent of it. Given the new SEC chairman's determination to correct over-regulation, the new rules may not require Web3 projects that want to issue assets or conduct public financing to make excessive disclosures, but there will certainly be a simple registration process and disclosure standards.

Speaking of disclosure standards, one naturally thinks of the information disclosed by Coinbase during its recent public sale of Monad tokens, including its market maker status and market-making terms. In other words, while the information disclosure requirements may be simpler, this crucial information, which wasn't mandatory in the past, may become indispensable in the future. Furthermore, the lowering of requirements for tokens and token-issuing projects inevitably corresponds to higher requirements for token-issuing platforms, which are also addressed in securities laws.

Thus, a reasonable explanation emerges for Coinbase's acquisition of Liquifi and Echo to position itself for asset issuance and public token sales: serving as a compliant platform for future token issuance. The author speculates that if Web3 projects wish to compliantly raise funds publicly in the United States, they must rely on an institution or platform that is at least well-established in terms of KYC and anti-money laundering procedures and is registered with the SEC.

Currently, the only publicly available information focuses on discussions surrounding "asset issuance." The new SEC rules are expected to relax standards to some extent, making it easier for new projects to issue assets and raise funds. However, all of this will inevitably be based on fundamental investor protection mechanisms. Compared to the previous requirement to establish an overseas non-profit foundation, the mechanism under the new rules may be relatively simpler.

Following asset issuance, this regulatory sandbox will likely explore further issues such as information disclosure by the issuing entity. The good news is that we will have a clearer understanding of the actual operation of projects in the future; the bad news is that compliant asset issuance also provides a reasonable exit channel for projects that leave the public market due to poor management. Compliance never means a reduction in screening difficulty, and tolerance for innovation will, in turn, place higher demands on the professionalism of investors.