Decentralized Finance bull run strategy: The US SEC has released Favourable Information, three major categories worth following.

Original Author: Cryptofada

Original translation: Felix, PANews

The Crypto Task Force Roundtable, chaired by SEC Chairman Paul Atkins on June 9, bodes well for crypto and DeFi participants in a number of ways. This is the most supportive attitude to DeFi that U.S. regulators have ever had, yet most people are not aware of it. Although not yet formally legislated, these remarks:

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

This is likely the spark 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 DeFi regulated by the United States is being born. This is not just a regulatory shift; it is also an investment game.

Key Positive Signals from the SEC Roundtable

1. Financial Independence

Atkins 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. 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 participation in the network itself could trigger securities regulation due to the Howey test. This explicit provision directly benefits the liquid staking market, which reaches a scale of $47 billion. The U.S. SEC has clearly indicated 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 features

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 like Singapore and Switzerland, allowing for controlled experiments without fully meeting the securities registration requirements: this could pave the way for the following situations:

• Permissionless Innovation
• Release of DeFi products in the United States
• Integrate faster with traditional finance

4. Self-custody is protected

Atkins advocates for the self-custody of digital assets, referring to it as "fundamental American values." 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. Publicly support Trump's pro-cryptocurrency agenda

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

6. Encouragement of On-Chain Resilience

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

Strategic Positioning Framework

Layer One: 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 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 capital seeking compliant staking solutions. As regulatory barriers are removed, the $47 billion liquid staking market could 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) are able to expand their institutional products in a more clearly regulated environment, particularly 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 Asset (RWA) protocols can now attempt 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 Category

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 assets across chains can now develop more complex products without the worry of 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

Focus on those protocols 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 Protocol: 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 agencies may prefer protocols with transparent and decentralized governance.

4. Building or Contributing to the Crypto Ecosystem in the United States

The SEC's signals will make the following parties more secure:

• On-chain startups
• Wallet Developer
• Staking as a Service Company
• Open source software contributors

Now is the time to go:

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

5. Projects that involve early layout by institutions.

Focus on institutional capital inflows and innovative exemption pilot projects:

• Establish positions in integrable liquidity DeFi protocols at institutions
• 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 the infrastructure.

6. Closely monitor 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 the simplified exemption framework

Institutional Adoption of Catalyst Analysis

Capital Flow Forecast

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

• Traditional asset management companies: Companies like BlackRock and Fidelity can now explore integrating DeFi into their businesses to achieve revenue growth, portfolio diversification, and improved operational efficiency. Currently, the adoption rate of DeFi among institutions is less than 5% of the traditional asset management scale, indicating significant growth potential.
• Corporate Fund Management: Nowadays, companies can consider using DeFi protocols for fund management operations, 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 consider DeFi protocols as a legitimate investment category for asset allocation. These investors typically invest with capital sizes ranging from $100 million to $1 billion, which represents a potential order-of-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 may also 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 Reflux: Due to the uncertainty of U.S. regulations, many DeFi protocols are developed overseas. The 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 rate: Achieve 10 times return using a combination strategy.

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

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% of funds to lending protocols, and 15% of funds to emerging categories with high upside potential.

The key lies in obtaining governance participation rights and revenue generation opportunities that were previously only available to professional investors. Under clear regulations, these protocols can offer more transparent and accessible mechanisms.

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: Above 100,000 USD)

Institution-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 robust governance structure, and institution-level security measures. At this scale, direct staking operations become feasible, and their risk-adjusted returns may be higher compared to liquid staking protocols.

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: As institutional adoption accelerates and the utility of protocols increases, regulatory clarity typically enables governance tokens in advantageous positions to appreciate by 3 to 5 times.

Yield Generation: DeFi protocols provide annual yields of 4-15% through various mechanisms such as staking rewards, trading fees, and lending interest. As institutional capital enters the market, regulatory clarity can 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 compounded returns, with yields potentially far exceeding traditional investment options over a period of 12 to 24 months.

Considerations for Implementation Timeline

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

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

Phase 3 (Q3 to Q4 2026): Complete integration of institutions, potential launch of products that merge traditional finance with DeFi, and the implementation of a mature regulatory framework.

The DeFi roundtable held by the SEC in the United States in June 2025 not only marks the evolution of regulation but also heralds the dawn 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 missing out before valuations soar with broader market recognition.

For mature investors, the current environment presents a rare fusion of clear regulation, technological advancement, and market undervaluation. Protocols and strategies capable of attracting institutional capital flows in the next 18 months are likely to 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 and the long-term value creation offered by mature, regulated financial markets.