Key facts
- The SEC has proposed new rules for crypto assets, including a safe harbor and exemptions for token issuance.
- The proposed rules aim to provide a framework for 'investment contracts' involving crypto assets.
- Companies could issue up to $5 million in tokens over four years and $75 million over 12 months under the proposal.
- The proposals were released after the Senate failed to pass the Digital Asset Market Clarity (CLARITY) Act.
- Token issuers would be subject to ongoing reporting requirements and need to provide financial statements.
The U.S. Securities and Exchange Commission (SEC) has put forth new rules for the cryptocurrency industry, aiming to establish a clearer regulatory framework in the absence of specific legislation from Congress. These proposed rules, announced Tuesday, include provisions for a safe harbor that would prevent certain tokens from being classified as "investment contracts" and offer exemptions for token issuance. The agency stated that this "tailored securities offering regime" is designed to facilitate capital raising while maintaining investor protections.
Notably absent from the proposal was an "innovation exemption" for crypto-based stocks, which had been anticipated. The SEC's move comes shortly after the U.S. Senate failed to advance the Digital Asset Market Clarity (CLARITY) Act, a bill intended to define the regulatory responsibilities of federal agencies concerning crypto assets. SEC Chair Paul Atkins emphasized the necessity of congressional legislation for creating durable and "future-proofed" rules, expressing support for the CLARITY Act.
Under the proposed rules, crypto companies could be permitted to issue up to $5 million in tokens over a four-year period, and up to $75 million within a 12-month timeframe. Issuers would be required to submit financial statements and adhere to ongoing reporting obligations. The public will have a 60-day window to provide feedback on the proposal following its publication in the Federal Register.
The SEC's proactive regulatory stance in the legislative vacuum precedes a scheduled meeting of the U.S. Commodity Futures Trading Commission (CFTC) to discuss cryptocurrencies, artificial intelligence, and prediction markets. A White House crypto adviser, Patrick Witt, indicated that regulators might intensify enforcement if Congress does not act on the CLARITY Act.
The legislative path for the CLARITY Act appears challenging, with limited session days remaining before the November elections and the subsequent swearing-in of a new Congress in 2027. Senate Majority Leader John Thune has filed for cloture on the bill, but securing a floor vote before the upcoming breaks remains uncertain.