Regulators may be stalling as the Clarity Act's progress remains uncertain.
By Nikhilesh De30 min ago3 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on U.S. Capitol building in Washington (Jesse Hamilton/CoinDesk)The U.S. Securities and Exchange Commission (SEC) unexpectedly canceled a scheduled meeting last Friday that was intended to progress its Reg Crypto rulemaking and reveal its long-awaited innovation exemption. This suspension appears linked to the ongoing discussions surrounding the Clarity Act.
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Everything in limboThe narrative
Last week, the SEC had announced an open meeting where commissioners would discuss the Reg Crypto proposal, which outlines how companies can conduct token-based fundraising and potentially exit SEC oversight upon issuing their own digital assets.
Additionally, sources indicated that the SEC was poised to present part of its innovation exemption, aimed at clarifying how issuers of security tokens could manage the underlying securities.
However, neither of these developments occurred.
Why it matters
Earlier this month, with the Digital Asset Market Clarity Act unlikely to be voted on before the Senate's August recess, industry stakeholders speculated that regulators might take action if Congress did not. While such actions would differ from legislative measures, they could be subject to legal challenges and easier to reverse by future administrations.
Breaking it down
This speculation hinges on the SEC and the Commodity Futures Trading Commission (CFTC) being able to finalize proposed rules in time for them to be implemented before any potential changes in SEC leadership.
However, this is not a certainty. The SEC announced late Thursday that the meeting was canceled and would be rescheduled later.
Reports from CoinDesk and others indicated that the SEC is postponing the rollout of its innovation exemption indefinitely.
Sources familiar with the matter revealed that the concerns regarding the Clarity Act influenced the SEC's decision to delay. The White House and lawmakers worry that any SEC actions might complicate the ongoing discussions related to the Clarity Act, especially with the Senate's first vote on the legislation approaching next month.
This implies that we might not see any new actions from the SEC until after the Senate reconvenes in early October.
Timing poses a significant issue as well. The formal process for rulemaking is lengthy; the SEC will seek and integrate public feedback on its proposals, publish revised rules, and ultimately finalize them. An implementation period will follow, allowing companies to comply with the new regulations.
According to an industry insider, the rulemaking phase alone could take nearly a year, followed by another year for implementation. This timeline brings the industry close to the next presidential administration, which could facilitate the reversal of any established frameworks or regulations.
This weekWednesday
- The White House will host crypto CEOs ahead of their meeting at the CFTC.
Thursday
- 17:00 UTC (1:00 p.m. ET) The CFTC's Innovation Advisory Committee will meet.
If you have any thoughts or questions regarding future topics or other feedback, feel free to reach out via email at nik@coindesk.com or connect with me on Bluesky @nikhileshde.bsky.social.
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See you next week!
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