Wall Street Pushback Halts SEC Crypto Fundraising Plan

The Securities and Exchange Commission has paused work on a proposed framework for crypto fundraising after objections from major banks and broker-dealers, according to people familiar with the matter.

Officials in Washington circulated draft language and held meetings with industry participants and market intermediaries in recent weeks. After those discussions, senior agency staff opted to slow the rollout to address legal and operational concerns raised by banks and brokers.

Representatives from large banks and broker-dealers flagged open questions about custody arrangements, underwriting liability and whether intermediaries would face new securities-law risks when facilitating token sales. Concerns included potential compliance costs, uncertainty over which tokens would be treated as securities and the role of regulated broker-dealers in handling fundraising transactions.

The pause does not mean the agency has abandoned the effort. Agency staff plan to refine rule language and seek further input from market participants and exchanges. People familiar with the discussions indicated the delay could push formal guidance or rulemaking back by several months, though no final schedule has been set.

Bank compliance teams and legal departments have been pressing for clearer rules so they can decide whether to take part in crypto capital raises. Several institutions signaled reluctance to underwrite or distribute token offerings without explicit safe harbors or clearer regulatory guidance. Some startups and token issuers that had been preparing private placements have paused fundraising plans while they await clarity.

One person briefed on the talks noted that major banks were unanimous in saying the draft left them exposed in ways they could not accept. Another participant characterized the exchanges with regulators as “detailed and technical,” focused on implementation challenges rather than broad policy disputes.

SEC spokespeople declined to comment. Executives at major banks contacted for comment did not provide immediate responses.

Legal and market experts note any revised framework will need to address investor protection as well as practical mechanics for underwriting, custody and distribution if banks and broker-dealers are to participate. Until the agency issues clearer language, many market participants are likely to approach structured crypto fundraising cautiously.