SKN | SEC Proposes New Crypto Rules as CLARITY Act Stalls in Congress

SEC Moves Forward Without CLARITY Act

The US Securities and Exchange Commission has proposed a new regulatory framework for certain crypto assets after lawmakers failed to advance the CLARITY Act before leaving Washington for their August recess.

The SEC said the proposed rules would establish a “clear and fit-for-purpose framework” for certain investment contracts involving crypto assets. The framework is designed to create a tailored securities offering regime that would allow companies to raise capital while maintaining investor protections.

The proposal comes just days after the US Senate failed to advance the Digital Asset Market Clarity Act, legislation intended to establish clearer boundaries between federal regulators overseeing the cryptocurrency industry.

Proposed Safe Harbor Could Change Token Regulation

One of the most significant elements of the SEC proposal is a safe harbor that would prevent qualifying cryptocurrencies from automatically being treated as “investment contracts.”

The rules would also establish exemptions for certain token issuances.

Under the proposed framework, eligible crypto companies could issue up to $5 million in tokens over a four-year period or up to $75 million during a 12-month period.

Token issuers would still face disclosure obligations. Companies would be required to provide financial statements and remain subject to ongoing reporting requirements.

The approach therefore seeks to provide additional flexibility for crypto businesses without removing regulatory oversight entirely.

SEC Says Congress Still Needs to Act

Despite moving forward with its own regulatory proposal, the SEC acknowledged that agency rules alone cannot replace legislation.

SEC Chair Paul Atkins said legislation remains necessary to establish “future-proofed” rules that can provide lasting certainty for the industry.

The SEC also reiterated its support for Congress advancing the CLARITY Act and sending it to President Donald Trump.

That distinction could become important for crypto companies and investors. Agency rules can provide a regulatory pathway under the current administration, but legislation could establish a more permanent framework that would be less vulnerable to future changes in regulatory policy.

Innovation Exemption Missing From Proposal

The SEC’s proposal did not include an expected innovation exemption for tokenized stocks.

The omission is notable as tokenized equities and other blockchain-based financial products continue to expand.

Instead, the agency focused its proposal on investment contracts involving crypto assets and the conditions under which certain token issuances could receive exemptions.

The public will have 60 days to submit comments after the proposal is published in the Federal Register.

The comment period could therefore become an important stage for crypto companies, investors and financial institutions seeking changes to the framework before the SEC adopts final rules.

CFTC Also Prepares Crypto Regulatory Action

The SEC’s move comes as the Commodity Futures Trading Commission prepares to address cryptocurrency regulation, artificial intelligence and prediction markets.

The CFTC said it planned to explore areas where regulatory action could complement future congressional legislation.

The parallel efforts by the SEC and CFTC suggest that US regulators may continue developing crypto-related rules even while Congress remains divided over broader market structure legislation.

White House crypto adviser Patrick Witt also indicated that regulators could move more aggressively on cryptocurrency rules if Congress cannot advance the CLARITY Act.

CLARITY Act Faces a Narrow Legislative Window

The future of the CLARITY Act remains uncertain.

Before the Senate entered its August recess, Majority Leader John Thune filed cloture on a motion to take up the legislation when lawmakers return in September.

However, the Senate’s legislative calendar leaves lawmakers with a limited amount of time.

After the August recess, senators are expected to have only 14 days in session before breaking again ahead of the November election. If the legislation does not advance during that period, lawmakers would have another 22 days in session before the next Congress begins in 2027.

That compressed timeline increases the importance of September negotiations and could determine whether the CLARITY Act moves forward before the current congressional session ends.

Closing Insights

The SEC’s proposed crypto rules provide the industry with a potential regulatory pathway while Congress continues to struggle with comprehensive market structure legislation. The proposed exemptions and investment-contract safe harbor could reduce uncertainty for some token issuers, but ongoing reporting and disclosure requirements mean the framework would not represent unrestricted regulatory relief. With the CFTC also preparing additional action and the Senate facing a narrow window to advance the CLARITY Act, the coming months could determine whether US crypto regulation develops primarily through agency rulemaking or through legislation establishing a broader and more durable framework.