DeFi, The U.S. 'Innovation Exemption' Policy, DeFi Tokens to Watch: All in This Article
Introduction
TradingKey – On June 9, 2025, the U.S. Securities and Exchange Commission (SEC) announced the "Innovation Exemption" policy for DeFi platforms, triggering a surge in AAVE, COMP, MKR, UNI, and other DeFi tokens. This move has brought DeFi back into the spotlight.
What exactly is DeFi, and what role does it play? Why has the SEC shifted its stance, now supporting DeFi? This article explores the fundamentals of DeFi, its advantages, and future trends.
What Is DeFi?
Decentralized Finance (DeFi) refers to a blockchain-based financial system that operates without traditional intermediaries such as banks or brokers. Instead, it relies on smart contracts to automate financial transactions.
In simple terms,DeFi is an upgrade to traditional finance (TradFi), offering distinct advantages:
DeFi | TradFi | |
Intermediaries | None | Banks, brokers, and financial institutions |
Accessibility | Open to anyone globally | Restricted by regional regulations |
Transparency | All transactions are publicly visible | Limited transparency |
Efficiency | Instant settlement | Transactions take hours or days |
Cost | Lower fees | Higher fees |
DeFi’s Growth and Market Trends
DeFi emerged in2015, with MakerDAO launching the first decentralized stablecoin protocol (DAI). By2020, platforms like Compound and Uniswap gained traction, pushing Total Value Locked (TVL) to new highs. In2021, DeFi reached its peak, with TVL surpassing $180 billion.
DeFi’s TVL changes, source: defillama.
However, 2022 saw setbacks due to the FTX collapse, SEC lawsuits, and a crypto bear market, causing a sharp decline in DeFi’s TVL. By2023, Real-World Assets (RWA) gained momentum, attracting institutional players like BlackRock, Citibank, and Franklin Templeton, leading to aDeFi market recovery.
According to CoinMarketCap and DeFiLlama, as of today:
- 2,075 DeFi tokens exist, with atotal market cap of $266.2 billion (8% of the crypto market).
- TVL stands at $117 billion, approaching2021 highs.
Future Outlook on DeFi
Unlike the Biden administration’s strict crypto regulations, President Trump’s government aims to position the U.S. as the global crypto hub, introducing pro-crypto policies.
For DeFi, the SEC has repealed previous restrictive proposals and is now working on the "Innovation Exemption" policy. SEC Chairman Paul Atkins stated that we are revising regulations to provide exemptions for on-chain financial systems, allowing SEC-regulated entities to launch blockchain-based products more efficiently.
With regulatory improvements, institutions like JPMorgan, Fidelity, and BlackRock are entering DeFi through compliant gateways like Aave Arc. While governments and institutions are embracing DeFi, their motivations differ — institutions seek profits, while governments aim for financial innovation and strategic dominance.
Which DeFi Tokens Are Worth Investing In?
Several DeFi tokens are gaining traction. Here are some promising projects:
Token | Investment Rationale |
Ethereum(ETH) | The backbone of the DeFi ecosystem |
Chainlink(LINK) | Leading decentralized oracle network, enabling smart contract data integration |
Uniswap(UNI) | Top decentralized exchange (DEX) with strong liquidity and innovation |
Aave(AAVE) | Leading DeFi lending platform, expanding into tokenized real-world assets (RWA) |
Lido DAO(LDO) | Provides liquid staking for ETH, enhancing capital efficiency |
Conclusion
DeFi is disrupting traditional finance, offering open and fair financial alternatives. The U.S. "Innovation Exemption" policy signals a regulatory shift, potentially accelerating DeFi’s growth. As technology advances and regulations evolve, theDeFi token market is poised for new opportunities.
