SEC Proposes Crypto Rules After CLARITY Act Fails

The U.S. Securities and Exchange Commission on Tuesday proposed rules to create a framework for certain crypto investment contracts after the Senate did not advance the Digital Asset Market Clarity (CLARITY) Act. The proposal would allow limited token offerings and impose financial disclosure and ongoing reporting requirements on issuers.

Under the proposed regime, token issuers could use exemptions that limit sales to $5 million over a four-year period and up to $75 million within any 12-month window. Companies using the exemptions would need to file financial statements and meet continuous reporting obligations. The proposal also includes a safe harbor intended to prevent some digital assets from being treated as investment contracts.

The SEC published a notice of the proposal and the public will have 60 days to comment once the measure appears in the Federal Register. The agency did not include an innovation exemption for crypto-based stocks that some market participants had expected.

SEC Chair Paul Atkins stressed the need for legislation to provide durable rules, writing, “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 added that the agency will continue to support Congress in delivering the CLARITY Act to President Trump’s desk. Atkins canceled a scheduled appearance at the Wyoming Blockchain Symposium the day the proposal was announced.

The proposal followed the Senate’s failure to move the CLARITY Act before lawmakers left for a month-long recess. Majority Leader John Thune filed cloture to take up the bill when the Senate returns in mid-September, but senators have a limited number of days in session before the November election, affecting the bill’s near-term prospects.

White House crypto adviser Patrick Witt warned that regulators could escalate enforcement if Congress does not pass legislation, saying regulators would “let loose” on crypto regulation if the CLARITY Act does not move forward. Separately, the Commodity Futures Trading Commission has scheduled a meeting to discuss crypto, artificial intelligence and prediction markets and said it will explore regulatory actions that could complement future congressional legislation.

If finalized, the SEC’s proposal would create an option for some issuers to raise capital under a securities framework with specific thresholds and reporting standards. Industry participants and lawmakers have a 60-day window to submit feedback to the agency before the proposal can move forward.