New Era of DeFi: Favourable Information Signals from US Regulators and Investment Opportunities

Recently, the special working group meeting on cryptocurrency chaired by the chairman of the U.S. Securities and Exchange Commission ( SEC ) conveyed positive signals for the cryptocurrency and Decentralized Finance industry. This may indicate that U.S. regulators are adopting a more open and supportive attitude. Although no formal legislation has been enacted yet, some viewpoints expressed in the meeting suggest that:

• Create a regulatory environment that encourages innovation
• Strengthen the legitimacy of self-custody and on-chain participation
• Establish more lenient and sensible rules for Decentralized Finance experiments

These signals could become a catalyst for the United States to lead a new round of Decentralized Finance (DeFi) development. For participants in the crypto space, this undoubtedly releases an important signal: a new era of DeFi regulated by the United States is on the way. This is not just a shift in regulatory attitude, but also a reshaping of the investment landscape.

Key Favourable Information Signals from the SEC Meeting

1. Financial Independence

The SEC chairman connects economic freedom, innovation, and private property rights with 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 previous confrontational attitude.

2. Clearly state that staking, mining, and validator operations do not fall under securities.

The conference clearly pointed out that staking, mining, and validator operations are not securities transactions, eliminating significant regulatory uncertainty that has long hindered institutional participation in consensus mechanisms. This addresses the fundamental concern that participation in the network itself could trigger securities regulation due to the Howey test. This clear provision directly benefits the liquid staking market, which reaches a scale of $47 billion.

This reduces regulatory uncertainty in the following areas:

• Liquidity Staking Protocol
• Validator Infrastructure Company
• DeFi protocol with staking functionality

3. On-Chain Product Innovation Exemption

The SEC chairman 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. This approach draws on successful fintech regulatory frameworks in regions like Singapore and Switzerland, allowing for controlled experiments without fully meeting securities registration requirements. This could pave the way for the following situations:

• Permissionless Innovation
• US Decentralized Finance products launched
• Integrate with traditional finance more quickly

4. Protect Self-Custody Rights

The SEC Chairman advocates for the self-custody of digital assets, calling it "an American fundamental value." This provides support for the following types of products:

• Wallet Provider
• Non-custodial exchange
• On-chain trading and investment tools

5. Support for pro-cryptocurrency policy agenda

The SEC chairman mentioned the goal of making the United States the "global cryptocurrency capital," aligning the regulatory tone with the current political leadership. As the results of the 2024 U.S. elections become clearer, this political alignment may unleash more Favourable Information regulatory policies and promote government-led cryptocurrency infrastructure development.

6. Encouragement for On-Chain Resilience

The SEC chairman cited data from S&P Global, praising the fact that DeFi was able to continue operating during the collapse of the centralized financial system. This is a direct acknowledgment of the reliability of DeFi in a pressured environment.

Strategic Positioning Framework

Layer 1: Core Infrastructure Protocol

The most direct beneficiaries of regulatory clarity are the protocols that form the backbone of DeFi infrastructure. These protocols typically have a high total locked value ( TVL ), mature governance structures, and clearly defined utility functions that align with traditional financial services.

Liquidity Staking Protocol: With the clarifications on staking rules, several major staking protocols are expected to attract institutional capital seeking compliant staking solutions. As regulatory barriers are removed, the liquidity staking market, which has reached $47 billion, could see significant growth.

Decentralized Exchange: Some major DEXs benefit from self-custody protection and enjoy innovation exemptions. These platforms can launch more complex financial products without facing regulatory delays.

Lending Agreements: Some major lending platforms are able to expand their institutional products under clearer regulations, especially in the areas of automated lending and synthetic asset creation.

Second Layer: Integration of Real World Assets

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

Leaders in the RWA field are expected to accelerate institutional adoption of tokenized securities, corporate credit, and structured products. Currently, the TVL in the RWA field is about 8 billion USD, and if the regulatory path becomes clearer, the sector could expand rapidly.

Layer 3: Emerging Innovation Category

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

Cross-chain infrastructure: Protocols that support secure asset transfers across chains 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 Decentralized Finance Bull Market?

1. Double down on high-reliability Decentralized Finance protocols

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

• Staking and LST Protocol
• Decentralized Exchange
• Stablecoin Protocol
• RWA Protocol

2. Reserve Governance Tokens

Tokens of core Decentralized Finance infrastructure (, especially those with high TVL and good regulatory compliance, may benefit.

3. Participate in On-chain Governance

Participate in governance forums and engage in delegated voting. Regulators 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 the launch or development of public goods
• Apply for funding or participate in the DAO ecosystem construction
• Join American DeFi organizations or DAOs

5. Early layout of projects involving institutional participation

Pay attention to institutional capital inflows and innovative exemption pilot projects:

• Establish positions in institutionally integrable liquidity DeFi protocols
• Pay attention to the pilot announcements from some large financial institutions.
• Pay close attention to the Ethereum ecosystem, especially considering the clarity of staking and the high adoption rate of infrastructure.

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

If the U.S. 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

Catalyst Analysis by Institutions

Capital Flow Forecast

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

• Traditional Asset Management Companies: Large asset management firms can now explore integrating DeFi into their businesses to achieve revenue growth, portfolio diversification, and improved operational efficiency. Currently, institutional adoption of DeFi is less than 5% of traditional asset management scale, indicating significant growth potential.

• Corporate Fund Management: Nowadays, companies can consider using Decentralized Finance protocols for fund management operations, including yield generation from cash reserves and automated payment systems. The corporate fund management market has approximately $50 trillion in assets, some of which may migrate to Decentralized Finance 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 in the range of $100 million to $1 billion, which could represent an order of magnitude increase in the protocol's TVL.

Innovation Acceleration Indicator

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

• Product development cycle: Previously, new DeFi products required 18 to 24 months of legal review, which may also involve the intervention of the US 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 the uncertainty of U.S. regulations, many DeFi protocols are developed overseas. A new framework may attract these projects back to U.S. jurisdiction, thereby increasing domestic blockchain development activities.

Case Study: Transforming $10,000 to $100,000 into $100,000 to $1,000,000

The above strategic framework can be applied to different scales of funding, developing specific asset allocation strategies for 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 combination 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 might allocate 60% of funds to highly liquid staking protocols and mainstream DEXs, 25% to lending protocols, and 15% to emerging categories with high growth potential.

The key lies in obtaining governance participation rights and profit generation opportunities that were previously only available to professional investors. Under clear regulations, these protocols can provide mechanisms that are more transparent and easier to participate in.

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

This capital scope can support more complex strategies, including direct participation in protocols, delegated governance, and the use of institutional-grade Decentralized Finance products. Strategic allocation may focus on governance tokens of major protocols )40%(, direct staking positions )30%(, exposure to RWA protocols )20%(, and innovative phase 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 ) funding range: over 100,000 USD (

Institutional scale capital can participate in wholesale DeFi operations, including directly operating verification nodes, managing protocol treasuries, and employing complex yield strategies. These participants can also engage in protocol collaboration and customized integration development.

Institutional strategies should emphasize operational protocols and establish a clear regulatory compliance framework, a complete 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 clarity in regulation typically leads to a 3 to 5 times appreciation in governance tokens that are in a favorable position.

Yield Generation: DeFi protocols offer 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.

Innovation Access: Early participation in innovation exemption agreements may yield extraordinarily high returns of 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 generate compound returns, and within a time frame of 12 to 24 months, its returns may significantly exceed traditional investment options.

Implementation Timeline Consideration

Phase One ) Q3 to Q4 2025: Implementation of preliminary regulatory guidelines, early institutional pilot projects, governance token appreciation for favourable information agreements.

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

Phase 3 ) Q3 to Q4 2026: Comprehensive realization of institutional integration, possible launch of traditional finance and Decentralized Finance (DeFi) integrated products, and the implementation of a mature regulatory framework.

The DeFi roundtable held by the U.S. SEC in June 2025 not only marks the evolution of regulation but also heralds the beginning of the era of DeFi institutions. The combination of clear regulation, political support, and technological maturity creates a unique opportunity for early positioning to avoid being left behind in wider market recognition.