SEC proposes new crypto rules after CLARITY Act stalls
The SEC proposes new crypto rules that would give companies a safe harbor so tokens are not treated as investment contracts, plus exemptions to issue up to $5 million over four years or $75 million in 12 months, after the Senate failed to advance the CLARITY Act before its August recess. The US securities regulator said the package would create a clear, fit-for-purpose framework for certain investment contracts involving crypto assets.
Key Takeaways
- The SEC proposed a tailored securities offering regime after Congress broke for recess without a market structure bill.
- Issuers could raise up to $5 million in tokens over four years or $75 million in a 12-month period, with financial statements and ongoing reporting.
- A safe harbor would exempt some cryptocurrencies from treatment as investment contracts.
- The public will have 60 days to comment after Federal Register publication, and the CLARITY Act could still return in September.
What would the SEC's proposed crypto rules actually do?
In a Tuesday notice, the US Securities and Exchange Commission said it proposed rules to create a "clear and fit-for-purpose framework for certain investment contracts involving crypto assets." The agency described a "tailored securities offering regime" that would allow entities to raise capital while preserving investor protections.
According to the proposed rules, crypto companies would be offered exemptions allowing the issuance of up to $5 million in tokens during a four-year period and up to $75 million during a 12-month period. Token issuers would be required to make financial statements and would be subject to ongoing reporting requirements.
The package also includes a safe harbor exempting cryptocurrencies from being treated as "investment contracts." It did not include an "innovation exemption" for crypto-based stocks, which had also been expected to be announced.
Why did the SEC act without the CLARITY Act?
The proposal arrived just days after the US Senate failed to advance the Digital Asset Market Clarity (CLARITY) Act, a bill expected to clarify the roles federal agencies would have in overseeing and regulating crypto. Lawmakers then broke for a month-long recess without passing a market structure bill.
SEC Chair Paul Atkins still argued that legislation is essential. "[L]egislation remains indispensable to enacting 'future-proofed' rules of the road that are durable enough to protect the work we are undertaking today from being unwound by a future rogue regulator," Atkins said. "The SEC has and will continue to support Congress in delivering the CLARITY Act to President Trump's desk."
White House crypto adviser Patrick Witt, speaking at the Wyoming Blockchain Symposium after Atkins canceled his scheduled appearance there, said US regulators would "let loose" on crypto regulation if Congress was unable to move forward on the CLARITY Act. For more on digital-asset policy, see BlasterPost's Fintech & Crypto Alerts coverage.
What happens next for comments and the CLARITY Act?
The public will have 60 days to comment on the proposal after it is published in the Federal Register. The SEC move also came ahead of a scheduled Thursday meeting of the US Commodity Futures Trading Commission on crypto, AI and prediction markets. The commodities regulator said it planned to address "areas where regulatory action can complement future congressional legislation."
Before the Senate broke for August state work periods, Majority Leader John Thune filed cloture on a motion to take up the CLARITY crypto bill when lawmakers return in mid-September. Following the August recess, senators only have 14 days in session before breaking again ahead of the November election.
If Thune and Republican lawmakers cannot get a floor vote before then, the Senate has another 22 days in session before 2027, when new members of Congress will be sworn in.