SEC Proposes Crypto Offering Rules as CLARITY Act Faces September Test

SEC proposes two crypto fundraising exemptions

The proposal establishes two fundraising tracks with different limits and disclosure requirements.

Both tracks would require principles-based narrative disclosures to investors. Activity conducted under the exemptions would remain subject to federal securities-law anti-fraud and anti-manipulation provisions, so the proposal would modify registration obligations rather than remove core investor-protection requirements.

The proposal would also create a safe harbor addressing when a crypto asset tied to an investment contract can stop receiving securities treatment. Atkins said, “In line with the commission’s earlier interpretative guidance, this proposal would also allow for a safe harbor once an issuer has completed or permanently ceased all essential managerial efforts that it represented or promised it would take under an investment contract.”

That framework would allow a crypto asset to stop being treated as a potential security once the prescribed conditions are met and the issuer has completed or permanently ended the essential managerial efforts associated with the investment contract.

The Aug. 18 release followed a canceled SEC meeting that had been scheduled for Aug. 14. An SEC spokesperson said the meeting was called off because of an “unforeseen scheduling issue.” The cancellation delayed the proposal rather than ending it.

The SEC opened a 60-day public comment period, after which the agency would typically spend additional months reviewing submissions and drafting a final version. SEC Commissioner Hester Peirce cautioned that the proposal is only one stage in a broader process. “This proposal is one step on a long road toward a clear, sensible, enforceable regulatory framework for crypto,” Peirce said.

Atkins also said legislation remains necessary even if regulators move ahead under existing authority. “Given the progress made in Congress to date on market structure legislation, let me be clear up front: Legislation 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,” he said.

Digital Chamber CEO Cody Carbone said the SEC had incorporated a number of suggestions from crypto companies into the proposed language. Carbone said his organization “will continue to work with the SEC to ensure consumers and the digital assets industry can thrive onshore in the U.S.”

CLARITY Act faces a compressed Senate timetable

The SEC proposal arrived as the Senate confronts a narrowing window to advance the more than 600-page Digital Asset Market Clarity Act, which is intended to establish a comprehensive federal regulatory framework for the crypto industry.

Lawmakers were on a monthlong August recess when Reg Crypto was released and were expected to return around mid-September before leaving Washington again in October. The Senate was described as having roughly three weeks of floor time in September to try to complete the legislation before a longer recess extending beyond the midterm election period.

Senate Majority Leader John Thune scheduled a cloture vote for Sept. 15. Alderoty, who also serves as president of the National Crypto Association, said that vote would be a decisive early test. “There is a viable path for Clarity,” Alderoty said. “September 15th, there will be the first procedural motion on the Senate floor. Basically, a motion to proceed. You need 60 votes for the motion to proceed to open up the gate.”

“So September 15th will be a bellwether mark as to whether this continues to advance through Congress,” Alderoty added. “We hope it does.”

The procedural motion would be only the first of several votes required to advance the legislation. Solana Policy Institute CEO Miller Whitehouse-Levine gave the bill considerably lower odds than several other participants in the debate.

“Right now, I would say it's in August recess purgatory,” Whitehouse-Levine said, noting that the Senate had been working on the legislation for more than a year. “As the end of the clock winds down on this Congress, getting the bill done becomes increasingly more difficult.”

Whitehouse-Levine said he remained “hopeful, but realistic about its odds” and stressed that the planned motion to proceed would be only the beginning of the Senate process.

He also said the current legislation represented “probably the sixth attempt at doing a market structure bill in the United States.” This time, Whitehouse-Levine said, traditional finance has “woken up to crypto,” drawing additional competing interests into negotiations.

Banks and large lenders continue to object to provisions involving stablecoin yield, while securities firms and derivatives companies are focused on provisions affecting their own businesses. “You have all these new interests that have woken up to the fact that, oh no, the Clarity Act could move, we better get our act together,” Whitehouse-Levine said. “And them getting their act together just means more stakeholders involved, which always makes it harder.”

Whitehouse-Levine also pointed to President Donald Trump’s involvement with cryptocurrency as an additional political complication for Democrats. He said lawmakers and congressional staff had collectively devoted “tens of thousands of man-hours” to the legislation and called the prospect of losing that work a “massive opportunity cost.”

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Stablecoin rewards and ethics remain sticking points

Stablecoin rewards remain one of the central disputes surrounding the legislation. Sens. Angela Alsobrooks, D-Md., and Thom Tillis, R-N.C., had negotiated a compromise under which platforms would be prohibited from paying rewards solely because customers hold a stablecoin while still permitting rewards tied to transactions and payments.

Senate Banking Committee Chair Tim Scott, R-S.C., said the issue had resurfaced. “We thought it [stablecoin issue] was all settled, but now they have a rearview mirror that's getting bigger and the windshield is getting smaller. So we're going to have to wrestle that down one more time.”

White House crypto adviser Patrick Witt remained more optimistic. Speaking at the annual SALT conference in Wyoming, Witt said the White House expected to negotiate with Democrats before the procedural vote. “We'll be sitting down with Democrats and really trying to hash out the areas where there are disagreements and get a solid vote on the 15th,” Witt said. “But I am truly optimistic and bullish about it.”

Witt also said regulators are preparing to move if Congress does not act. “There is a robust set of rulemaking that will go out — we're giving every opportunity for the Senate and for Congress to pass the bill before we ultimately break glass and move in that direction,” he said.

“We can't wait forever as we know, and we've got the window in September here and if ultimately it doesn't succeed, they're going to let loose,” Witt added.

Alderoty likewise said the SEC and CFTC would continue with regulatory work even if legislation stalls. “If it doesn't, the SEC and the CFTC have come out publicly and said, 'We're not going to stop with our rulemaking in terms of regulations when it comes to crypto.'”

“The SEC and the CFTC are working very closely together, which is a great thing to see,” Alderoty added. “In the past, they haven't always done that.”

Alderoty said legislation would still provide a more durable foundation than agency rules alone. “We certainly want legislation. This legislation is sort of unbeatable. It's very hard to undo. Legislation will always be complemented by regulations. We're going to have regulation one way or the other.”

Whitehouse-Levine also urged regulators to act independently if Congress cannot complete the bill. “I am hopeful that the regulatory agencies move quickly, because my hope in Congress's ability to deliver is diminishing,” he said.

“I think that's why it's high time for the regulators to move because I think to the extent Congress, again, is not going to legislate, they're abdicating their responsibility and the regulators need to do so,” Whitehouse-Levine added.

The Solana Policy Institute’s regulatory priorities include pathways for token fundraising and exemptions that would permit more securities and derivatives trading onchain in the U.S. “We're going to be pretty focused on these regulatory actions now,” Whitehouse-Levine said. “I think we can't afford to keep waiting for Congress at this point.”

Ethics provisions addressing Trump’s crypto interests are another point of negotiation. Trump had previously agreed to language barring a public official or employee, as well as their spouses, from issuing or sponsoring digital assets while still allowing them to invest in digital assets.

That language contains a sunset provision ending in January 2029. Trump was also considering a newer compromise from Sens. Ruben Gallego, D-Ariz., and Thom Tillis, R-N.C., that would allow state attorneys general to enforce the provision.

Sen. Cynthia Lummis, R-Wyo., said she did not know how Trump would respond. “I don't know what he'll do, but I can tell you he's already agreed to more than any president in history,” Lummis said.

Alderoty warns about jobs and economic activity moving offshore

Alderoty framed passage of the CLARITY Act as an economic competitiveness issue, arguing that prolonged uncertainty could push activity outside the United States.

“I think the U.S. will miss an incredible opportunity if we don't get it through,” Alderoty said. “I think they may alienate some of those economic benefits and maybe push it offshore.”

National Crypto Association research cited by Alderoty produced several figures on U.S. crypto participation and economic activity.

“This isn't just good for the crypto industry; it's good for the future,” Alderoty said. “It's jobs, it's tax dollars, it's innovation, and if we don't get it right, there's a real danger that this is gonna be pushed offshore.”

Research released Aug. 18 also challenged stereotypes about U.S. crypto ownership. “Crypto has this reputation that's fueled by the crypto haters, that it's the crypto bros, the crypto boys,” Alderoty said. “And it's not. It's really not.”

“More crypto holders in this country work in manufacturing and construction than work in finance and tech,” Alderoty added. “Those are the people that are leaning into crypto. Not because they see it as a replacement for traditional finance; they see it as a supplement to traditional finance. A way to create some independence for them. That's what this is all about.”