Countdown to SEC New Regulations: How "Innovation Exemptions" Drive Coinbase's Acquisition Strategy

2025-12-03 18:00:00

Collection

The issuance can be unregistered or simply registered, but the issuance platform may have requirements.

Author: Eric, Foresight News

On the morning of December 2, local time, SEC Chairman Paul Atkins confirmed in a speech at the New York Stock Exchange that the innovation exemption rules for cryptocurrency companies have 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 the disclosure requirements for innovative businesses, reduce mandatory disclosures, and scale down requirements based on company size, making it easier for small companies to go public. Additionally, Paul Atkins hopes to promote the "depoliticization" of shareholder meetings, shifting the focus back to company operations.

Paul Atkins believes that the current regulatory requirements for disclosures are overly complicated and should focus on "financial materiality." Bloomberg suggests that Paul Atkins is hinting at the Trump administration's opposition to shareholder initiatives focused on environmental, social, and governance (ESG) measures, arguing that disclosures in this area should be reduced.

The mention of these seemingly unrelated points about Crypto is because the specific terms for the innovation exemption rules for cryptocurrency companies have yet to be announced. However, we can draw some simple conclusions from the listings of several Web3 industry companies this year and the attitude of the new Federal Reserve Chairman:

First, the new SEC team does not intend to "loosen regulations," but rather aims to eliminate outdated and redundant rules from the existing regulatory framework, thereby reducing compliance costs for companies. Many media reports have mentioned that Paul Atkins hopes to lower the requirements for "mandatory disclosures" while increasing the emphasis on "financial materiality" information. The listings of Crypto companies like Circle and Bullish reflect this trend.

As for the "exemption," U.S. securities law has long had clear provisions, which essentially refer to special circumstances that can exempt complex registration processes. Many previous token issuances have actually utilized the exemption policies of securities law and must meet a series of requirements to potentially list on exchanges like Coinbase and Kraken for retail investors in the U.S.

However, meeting the requirements for these exemption policies can be quite troublesome. I learned from informed sources that Zksync had wanted to issue tokens for a long time, but such a large-scale project underwent very complex adjustments in its organizational structure to avoid regulatory troubles, ultimately succeeding in issuing tokens while ensuring full compliance.

All of these examples have one major premise: tokens are still defined as securities in some sense. However, the new exemption policy may bring some changes.

On November 12, local time, Paul Atkins stated in a speech at the Federal Reserve Bank of Philadelphia that Project Crypto will "draw a line" to distinguish different types of crypto assets. Paul Atkins categorizes crypto assets into four types:

Digital commodities or network tokens: value derived from a well-functioning and decentralized network, rather than from management's promises;
Digital collectibles: NFTs and similar items purchased for use or appreciation, rather than for profit;
Digital tools: utility tokens that provide access or credentials;
Tokenized securities: blockchain-based representations of traditional financial instruments.

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

Due to the impact of the government shutdown, the complete exemption rules are expected to be announced upon their effectiveness. Currently, public information is very limited, but I have still found some clues regarding the exemption terms.

In the SEC comment letter released on April 13, 2025, it mentioned terms from an early version of the exemption proposal: the proposal conditions exemptions for ICOs to facilitate early fundraising for blockchain projects. It implements a mandatory basic registration system to ensure oversight of entities under exemption and prevent abuse. The SEC establishes public verification tools to enhance transparency and investor protection.

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

Clearly, the exemption measures that will take effect in January should be an extension independent of or at least a relaxation of the securities law requirements. Combined with the new SEC Chairman's determination to correct overregulation, the new rules may not require Web3 projects seeking to issue assets or conduct public financing to make excessive disclosures, but there will certainly be simple registration processes and disclosure standards.

Speaking of disclosure standards, it naturally brings to mind the information disclosed by Coinbase during the public sale of Monad tokens, which included the identity of market makers and market-making terms. This means that while the disclosure requirements may be relatively simple, these key pieces of information that were not previously mandatory may become indispensable in the future. Furthermore, the reduction in requirements for tokens and token issuance projects will inevitably correspond to an increase in requirements for token issuance platforms, which also has corresponding standards in securities law.

Thus, Coinbase's acquisition of Liquifi and Echo to lay out asset issuance and token public sales has a reasonable explanation: as a compliant platform for future token issuance. I speculate that in the future, if Web3 projects want to conduct public fundraising in the U.S. in compliance, they must rely on an institution or platform that is at least compliant with basic issues like KYC and anti-money laundering and registered with the SEC.

Currently, the limited public information is focused on discussions around "asset issuance." The SEC's new rules are expected to relax standards to some extent, allowing new projects to issue assets and raise funds more conveniently, but all of this will undoubtedly be built on a basic investor protection mechanism. However, compared to the past, where it was necessary to establish overseas non-profit foundations, the mechanism after the new rules may be relatively simpler.

After asset issuance, this regulatory sandbox will likely further explore issues such as information disclosure by issuing entities. The good news is that in the future, we may have a clearer understanding of the actual operational status of projects; the bad news is that compliant asset issuance also provides a reasonable exit channel for projects to leave the public market due to poor management. Compliance never means a reduction in selection difficulty, and inclusivity for innovation will also raise higher requirements for investor professionalism.