Weekly Crypto Regs Roundup: SEC Mulls Innovation Exemption, Lummis Backs Bitcoin Tax Break

The crypto regulation environment for digital assets in the U.S. is evolving rapidly, with policymakers balancing technological development and investor protection ahead of the 2026 election cycle.

This week’s developments mark a major shift toward mainstreaming crypto within traditional finance—from Washington’s proposed “innovation exemption” for blockchain startups to North Dakota’s state-backed stablecoin and Senator Cynthia Lummis’s renewed push for tax reform on everyday Bitcoin use.

SEC Eyes “Innovation Exemption” to Keep Builders Onshore

U.S. Securities and Exchange Commission (SEC) Chair Paul Atkins confirmed that the agency is finalizing an “innovation exemption” framework intended to support crypto firms experimenting with blockchain applications inside the United States.

The measure, expected by the end of 2025, would offer a regulated sandbox for blockchain startups, allowing them to test products under limited oversight rather than relocating to friendlier jurisdictions.

“Atkins said this remains a top priority despite the government shutdown,” CoinDesk reported. “We want innovators to feel welcome here so they don’t flee to foreign jurisdictions,” he added.

If adopted, the exemption could provide a clear pathway for blockchain firms to innovate within the U.S. without facing immediate enforcement risks—a long-standing concern for the crypto industry. Analysts view the move as a strategic response to international competition, as jurisdictions such as the EU, UAE, and Singapore have already implemented comprehensive digital asset frameworks.

North Dakota Launches the “Roughrider Coin”—A State-Backed Stablecoin

In a move that could redefine state-level participation in digital finance, North Dakota has announced plans to launch the “Roughrider Coin” in 2026 through the Bank of North Dakota, the nation’s only state-owned bank. Developed in partnership with fintech firm Fiserv, the stablecoin will be fully backed by U.S. dollars and primarily used for interbank transactions, such as loan settlements and construction advances.

North Dakota’s initiative follows Wyoming’s Frontier Stable Token, launched earlier this year, positioning the two states at the forefront of integrating blockchain into public financial infrastructure. By leveraging distributed ledger technology, the Roughrider Coin seeks to make financial transactions between local banks faster, more secure, and less reliant on traditional payment rails.

Industry observers say the project could serve as a blueprint for other U.S. states exploring tokenized money systems, especially as Washington debates the future of central bank digital currencies (CBDCs).

Senator Lummis and Jack Dorsey Unite on Bitcoin Tax Reform

Meanwhile, Senator Cynthia Lummis (R-WY) is advancing legislation inspired by Jack Dorsey, the founder of Block and a vocal Bitcoin advocate, to exempt small Bitcoin transactions from capital gains tax. The proposed “de minimis” exemption would exclude purchases under $300—up to $5,000 annually per taxpayer—from IRS reporting requirements.

The measure would make Bitcoin more practical for day-to-day payments, removing one of the biggest obstacles to crypto’s mainstream adoption. “Working on it,” Lummis confirmed on X, pointing out her ongoing collaboration with Dorsey.

The initiative revives her earlier Digital Asset Tax Fairness Act, which stalled earlier this year, and aligns with broader Republican efforts to reduce regulatory friction for digital assets.

Crypto Becomes a Voter Issue Ahead of 2026

A new poll from McLaughlin & Associates and The Digital Chamber shows that 64% of voters now consider a candidate’s stance on crypto “very important” in shaping their vote. The results indicate a growing bipartisan interest in digital assets, with most investors favoring Republicans to lead crypto policy reform.

Three-quarters of respondents said they support the Trump administration’s rollback of Biden-era enforcement actions on digital assets, reflecting a shift in public sentiment toward lighter regulation and innovation-led policy.

As crypto regulation deepens, digital assets are evolving from niche financial tools to a defining political issue. With federal agencies, state governments, and lawmakers now aligned on expanding blockchain’s role in the economy, 2025 may mark the year the U.S. began closing the gap between regulation and innovation.