When Paul Atkins was sworn in as chair of the US Securities and Exchange Commission (SEC) in April 2025, he was widely expected to help usher in President Trump’s deregulation drive. His remarks at a recent SEC event suggest he is committed to that cause. At a roundtable on decentralised finance (DeFi) held on 9 June 2025, titled ‘DeFi and the American Spirit,’ Atkins voiced confidence in the technology’s potential to promote economic freedom and innovation. “This is an apt title,” he said, “because the American values of economic liberty, private property rights, and innovation are in the DNA of the DeFi, or Decentralized Finance, movement.”
DeFi broadly refers to financial technologies built on a blockchain that enable peer-to-peer transactions eliminating the need for intermediaries like banks. In the eyes of its boosters, transparency and trust are built into the very algorithmic lifeblood of DeFi transactions.
Atkins is not a lone DeFi booster within the current SEC. According to another participant, SEC Commissioner Mark Uyeda, the Commission’s approach has shifted significantly. “The SEC’s treatment of decentralized finance and other emerging technologies over the past four years was not conducive to regulatory transparency,” Uyeda said. “It discouraged entrepreneurs and those developing DeFi from engaging with the Commission.” But he noted that the SEC’s approach has now changed.
Clarity Beats Ambiguity
Momentum in the U.S. appears to be shifting toward a more open and transparent regulatory posture for DeFi and other fintech innovations. Still, cautionary notes were sounded. The lone Democratic commissioner on the SEC, Caroline Crenshaw, urged prudence. “With issues this complex and stakes this high, it’s better to do it right than fast,” she said, emphasising the need to address these challenges “through the legally sanctioned process of formal rulemaking.”
Of course, prudence can mean guarding against both overregulation and the under-regulation of disruptive technology. One critic of EU crypto legislation recently remarked that despite volumes of policy documents, “no one actually knows what EU policymakers mean by DeFi.”
Whatever their ultimate policy preferences, investors on both sides of the Atlantic will likely welcome what’s been lacking so far: clarity, coherence, and transparent outcomes.
Move fast and don’t break anything
Along with crypto and other blockchain-based technologies, artificial intelligence is the major disruptive technology of the moment. It’s no surprise that leaders are keen to harness the power of AI (or at least ensure their countries don’t fall too far behind the AI arms race). For instance, Prime Minister Keir Starmer announced his ambition for the UK to become an “AI maker not an AI taker”, saying the public should embrace the emerging technology.
What can financial regulators do promote responsible innovation? The UK Financial Conduct Authority (FCA) is taking a proactive approach with its ‘Supercharged Sandbox’, offering financial services firms access to “data, technical expertise and regulatory support” in a secure environment to experiment with AI applications.
As SEC Commissioner Hester Peirce commented, surveying the evidence for sandboxes more generally, “sandboxes have proven effective in facilitating innovation in highly regulated sectors”. Notably, they can enable smaller companies to more effectively enter the market and compete with established players.
Peirce quoted a report showing firms that entered the FCA’s sandbox “raised 15% more capital, are 50% more likely to raise capital, and are 25% more likely to survive years later”. They also better understood how regulatory impacts would impact their product and had a faster route to producing a minimum viable product.
A new technology paradigm
In the case of AI, which promises to be enormously disruptive, with unusually complex, often unforeseeable outcomes, a controlled forum for experimentation could be especially useful.
Whatever framework for innovation lawmakers and regulators ultimately choose, the broader lesson for investors and the financial services sector is clear: change is coming, in a big way. AI, DeFi and other crypto applications are already transforming the way we think about finance.
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