Regulatory easing brings opportunities: Three major Decentralized Finance tracks welcome a layout window.

Author: Cryptofada

Compiled by: Felix, PANews

Original Title: DeFi Bull Market Strategy: The U.S. SEC Has Released Positive Signals, Three Categories Worth Paying Attention To

On June 9, a roundtable meeting of the cryptocurrency special task force chaired by Paul Atkins, the chairman of the U.S. Securities and Exchange Commission (SEC), foreshadows a potentially favorable situation for cryptocurrency and DeFi participants in several respects. This is the most supportive stance that U.S. regulators have ever taken towards DeFi, yet most people have not yet realized this. Although there has been no formal legislation, these remarks:

• Create a regulatory environment that encourages innovation
• Strengthen the legitimacy of self-custody and on-chain participation
• Implying more flexible and sensible rules for DeFi experiments

This is likely the catalyst for a new round of DeFi revival led by the United States. If you are in the crypto space, you know that this undoubtedly sends a signal: a new era of regulated DeFi in the United States is being born. This is not just a regulatory shift, but also a game of investment.

Key bullish signal from the SEC roundtable discussion

1. Financial Independence

Atkins links economic freedom, innovation, and private property rights to the spirit of DeFi. This narrative redefines DeFi as a continuation of the American financial independence spirit, rather than a regulatory threat. This stands in stark contrast to the previously adversarial attitude.

2. Eliminate the uncertainty of the Howey Test: Staking, Mining, and Validators — Not Securities

It is clearly stated that staking, mining, and validator operations are not securities transactions, eliminating the significant regulatory shadow that has long hindered institutional participation in consensus mechanisms. This addresses the fundamental concern that network participation itself could trigger securities regulation due to the Howey test. This clear provision directly benefits the $47 billion liquid staking market. The U.S. SEC has explicitly stated that participation in proof of stake or proof of work as a miner/validator, or participating in staking through staking as a service, is essentially not a securities transaction. This reduces regulatory uncertainty in the following areas:

• Liquid Staking Protocols (e.g., Lido, RocketPool)
• Validator Infrastructure Company
• DeFi protocols with staking functionality

3. On-chain product innovation exemption

Atkins proposed a "conditional exemption" or "innovation exemption" policy that allows for the rapid testing and launch of new DeFi products without the cumbersome SEC registration. The proposed "conditional exemption" mechanism creates a regulatory sandbox specifically designed for DeFi innovation. This approach draws on the successful fintech regulatory frameworks of jurisdictions such as Singapore and Switzerland, allowing for controlled experiments without fully meeting securities registration requirements: this could pave the way for the following situations:

• Permissionless Innovation
• Launch of US DeFi Products
• Faster integration with traditional finance

4. Self-custody is protected

Atkins advocates for the self-custody of digital assets, referring to it as "the fundamental values of America." This supports the following types of products:

• Wallet providers (e.g., MetaMask, Ledger)
• Non-custodial exchanges (e.g., Uniswap)
• On-chain trading and investment tools

5. Public support for Trump's pro-crypto agenda

Atkins mentioned Trump's goal of making the U.S. the "global cryptocurrency capital," aligning the regulatory tone with the current political leadership. As the dust settles from the 2024 U.S. elections, this political alignment may unleash more favorable regulatory policies and promote government-led cryptocurrency infrastructure development.

6. Encouraging On-Chain Resilience

Atkins cited data from S&P Global, praising that DeFi was still able to operate during the collapse of centralized financial systems (such as FTX and Celsius). This is a direct acknowledgment of DeFi's reliability in a stressful environment.

Strategic Positioning Framework

Layer One: Core Infrastructure Protocol

The most direct beneficiaries of regulatory clarity are the protocols that constitute the backbone of DeFi infrastructure. These protocols typically have a high Total Value Locked (TVL), mature governance structures, and clear utility functions that align with traditional financial services.

Liquid Staking Protocols: With the clarification of staking rules, protocols such as Lido Finance ($LDO), Rocket Pool ($RPL), and Frax Ether ($FXS) are expected to attract institutional funds seeking compliant staking solutions. As regulatory barriers are removed, the liquid staking market, valued at $47 billion, may see significant growth.

Decentralized exchanges: Uniswap ($UNI), Curve ($CRV), and similar protocols benefit from self-custody protection while enjoying innovation exemptions. These platforms can launch more complex financial products without facing regulatory delays.

Lending Agreements: Aave ($AAVE), Compound ($COMP), and MakerDAO ($MKR) can expand their institutional-facing products under clearer regulations, especially in the areas of automated lending and synthetic asset creation.

Layer Two: Integration of Real-World Assets

The innovative exemption framework is particularly beneficial for connecting traditional finance and DeFi protocols. Real World Asset (RWA) protocols can now experiment with tokenization models without the cumbersome securities registration process.

Leaders in the RWA space: Ondo Finance, Maple Finance, and Centrifuge are expected to accelerate institutional adoption of tokenized securities, corporate credit, and structured products. Currently, the TVL in the RWA space is approximately $8 billion, and if the regulatory path becomes clearer, this sector could expand rapidly.

Third Layer: Emerging Innovation Categories

The conditional exemption mechanism has created opportunities for a new category of DeFi products that had previously stalled due to regulatory uncertainty.

Cross-chain infrastructure: Protocols that support the secure transfer of cross-chain assets can now develop more complex products without worrying about inadvertently violating securities laws.

Automated financial products: yield optimization protocols, automated trading systems, and algorithmic asset management tools can now be developed and deployed more quickly in the U.S. market.

How to prepare for the future DeFi bull market?

1. Double down on highly reliable DeFi protocols

Pay attention to those protocols that are likely to benefit from regulatory clarity:

• Staking and LST: Lido, RocketPool, ether.fi, Coinbase's cbETH
• Decentralized exchanges: Uniswap, Curve, GMX, SushiSwap
• Stablecoin Protocols: MakerDAO, Ethena, Frax
• RWA Protocols: Ondo, Maple, Centrifuge

2. Accumulating Governance Tokens

Tokens of core DeFi infrastructure (especially those with high TVL and good regulatory compliance) may benefit: $UNI, $LDO, $AAVE, $RPL, $MKR, $FXS, $CRV.

3. Participate in on-chain governance

Participate in governance forums and engage in delegated voting. Regulatory authorities may prefer protocols with transparent and decentralized governance.

4. Build or contribute in the U.S. crypto ecosystem

The signals from the SEC will make the following parties safer:

• On-chain startups
• Wallet Developer
• Staking as a Service Company
• Open Source Software Contributor

Now is the time to go:

• Contribute to or launch public products
• Apply for funding or participate in the DAO ecosystem construction (such as Optimism Retro Funding, Gitcoin)
• Join a DeFi organization or DAO in the United States

5. Early layout of projects involving institutional participation

Focus on institutional capital inflows and innovative exemption pilot projects:

• Establish positions in institutional integrable liquidity DeFi protocols
• Pay attention to pilot announcements from companies like Coinbase, Franklin Templeton, and BlackRock.
• Keep a close eye on the Ethereum ecosystem, especially given the clarity of staking and the high adoption rate of its infrastructure.

6. Pay close attention to the "Innovation Exemption" guidelines

If the US SEC issues clear standards, you can:

• Launch new DeFi tools that meet exemption criteria
• Obtain airdrops or incentives from compliance agreements
• Create content or services for a simplified exemption framework

Institutions adopt catalyst analysis

Capital Flow Forecast

The clarity of regulation has opened up multiple pathways for institutions that were previously blocked:

• Traditional asset management companies: Firms like BlackRock and Fidelity can now explore integrating DeFi into their businesses to achieve revenue growth, portfolio diversification, and operational efficiency improvements. Currently, the adoption rate of DeFi among institutions is less than 5% of traditional asset management scale, indicating significant growth potential.
• Corporate Fund Management: Nowadays, companies can consider using DeFi protocols for fund management activities, including yield generation on cash reserves and automated payment systems. The corporate fund management market has approximately $50 trillion in assets, some of which may migrate to DeFi protocols.
• Pension funds and sovereign funds: Large institutional investors can now view DeFi protocols as a legitimate investment category for asset allocation. These investors typically invest with a capital scale of $100 million to $1 billion, which represents a potential magnitude increase in the protocol's TVL.

Innovation Acceleration Index

The innovative exemption framework can significantly accelerate the development process of DeFi:

• Product development cycle: Previously, new DeFi products required 18 to 24 months of legal review and might involve the intervention of the U.S. SEC. The exemption framework is expected to shorten this cycle to 6 to 12 months, thereby effectively accelerating the pace of financial innovation.
• Regional Reflow: Due to regulatory uncertainty in the United States, many DeFi protocols are developed overseas. The new framework may attract these projects back to the U.S. jurisdiction, thereby increasing domestic blockchain development activity.

Case Study: Converting $10,000 to $100,000

The above strategic framework can be applied to different scales of funding, developing specific asset allocation strategies tailored to different risk preferences and investment horizons.

Timeline: 12 to 24 months

Funding range: $10,000 to $100,000

Target investment return: Achieve 10 times return using a portfolio strategy.

Retail Investor Strategy (Capital Range: $10,000 to $25,000)

For retail participants, the focus should be on mature protocols with clear regulatory positioning and strong fundamentals. A conservative strategy may allocate 60% of funds to highly liquid staking protocols and mainstream DEXs, 25% to lending protocols, and 15% to emerging categories with high upside potential.

The key lies in obtaining governance participation rights and profit generation opportunities that were previously only available to professional investors. Under clear regulation, these protocols can provide a more transparent and accessible mechanism for participation.

High Net Worth Strategy (Capital Range: $25,000 – $100,000)

This capital range can support more complex strategies, including direct participation in protocols, delegated governance, and the use of institutional-level DeFi products. The strategic allocation may focus on governance tokens of major protocols (40%), direct staking positions (30%), exposure to RWA protocols (20%), and innovative stage protocols (10%).

High net worth participants can also engage more actively in governance and create potential additional value through governance mining and participating in the early development of protocols.

Institutional Strategy (Capital Range: Over $100,000)

Institutional-sized capital can participate in wholesale DeFi operations, including directly operating validation nodes, managing protocol treasuries, and adopting complex yield strategies. These participants can also engage in protocol collaborations and customized integration development.

Institutional strategies should emphasize operational protocols and establish a clear regulatory compliance framework, a sound governance structure, and institutional-level security measures. At this scale, direct staking operations become feasible, and compared to liquid staking protocols, their risk-adjusted returns may be higher.

Return Potential Analysis

Conservative predictions based on past DeFi application cycles indicate that the potential returns within these funding ranges are as follows:

Token appreciation: With the acceleration of institutional adoption and the enhancement of protocol utility, increased regulatory clarity usually leads to a 3 to 5 times appreciation of governance tokens that are in a favorable position.

Yield Generation: DeFi protocols provide annual yields of 4-15% through various mechanisms such as staking rewards, transaction fees, and lending interest. As institutional capital enters the market, regulatory clarity may stabilize and potentially increase these yields.

Innovative Access: Early participation in innovation exemption agreements may yield extremely high returns (5 to 10 times), as these projects will develop new financial primitives and capture market share in emerging categories.

Compound Effect: The combination of token appreciation, yield generation, and governance participation can produce compound returns, with yields potentially far exceeding traditional investment options over a 12 to 24 month period.

Implementation Schedule Consideration

Phase One (Q3 to Q4 of 2025): Implementation of preliminary regulatory guidelines, early institutional pilot projects, and appreciation of governance tokens in favorable positioning agreements.

Phase Two (Q1 to Q2 2026): Wider institutional adoption, new product launches under innovation exemptions, and significant growth in TVL of major protocols.

Phase Three (Q3 to Q4 2026): Full institutional integration is achieved, and traditional finance and DeFi fusion products may be launched, with a mature regulatory framework implemented.

The DeFi roundtable hosted by the US SEC in June 2025 not only marks the evolution of regulation but also heralds the advent of the DeFi institutional era. The combination of clear regulation, political support, and technological maturity creates a unique opportunity for early positioning to avoid missing out before valuations are driven up by broader market recognition.

For mature investors, the current environment presents a rare combination of clear regulation, technological advancement, and market undervaluation. The protocols and strategies that can attract institutional capital flows in the next 18 months will likely determine the next phase of growth and value creation in DeFi.

The transition from experimental technology to regulated financial infrastructure marks a fundamental shift in the value proposition of DeFi. Those who strategically position themselves during this regulatory transition may benefit from the immediate effects brought by institutional adoption as well as the long-term value creation from mature, regulated financial markets.