- Hopes that regulators could advance crypto policy if the Clarity Act stalls are also beginning to fade.
- The U.S. Securities and Exchange Commission abruptly canceled an open meeting scheduled for last Friday, where commissioners were expected to discuss the proposed Reg Crypto framework and potentially release part of its long-delayed innovation exemption. The postponement appears to be tied to uncertainty surrounding the Clarity Act.
Crypto policy remains uncertain
- The SEC had announced earlier last week that commissioners would meet publicly to discuss Reg Crypto, a proposed framework that would establish rules for companies seeking to raise funds through tokens and potentially allow certain digital asset issuers to move beyond the agency’s jurisdiction.
- Industry sources had also indicated that the SEC was preparing to unveil at least part of its innovation exemption, which could address how issuers of tokenized securities manage the underlying assets.
- Neither initiative went ahead as expected.
Why it matters
- Earlier this month, it became increasingly clear that the Digital Asset Market Clarity Act would not receive a Senate vote before the August recess. Some industry participants argued that regulators could fill the gap if Congress failed to act.
- However, regulatory action would be less durable than legislation. SEC or CFTC rules could face legal challenges or be reversed by a future administration, whereas congressional legislation would generally be harder to dismantle.
Regulatory timelines add another hurdle
- The argument for regulatory action also assumes that the SEC and CFTC can complete their rulemaking before a future administration has the opportunity to change course.
- That timeline is now uncertain. The SEC said late Thursday that it had called off the meeting and planned to reschedule it.
- Reports also indicated that the agency had put its innovation exemption on hold indefinitely.
- People familiar with the matter told CoinDesk that concerns over the Clarity Act contributed to the delay. The White House and lawmakers reportedly fear that independent SEC action could complicate negotiations surrounding the legislation before the Senate’s anticipated initial vote next month.
- This could mean the SEC takes little further action until lawmakers return from their next recess in early October.
- Even then, any new rules would take time to complete. The SEC would need to gather public comments, assess feedback, publish revised proposals and eventually approve final regulations. Companies would then need additional time to prepare for compliance.
- An industry source estimated that the rulemaking stage alone could take close to a year, followed by another year for implementation. That timeline could bring the process close to the next presidential administration, increasing the possibility that a new administration could revise or overturn the resulting framework.
