The SEC announced formal rulemaking related to crypto assets, aiming to provide the clarity that has been lacking since the early days of crypto. It addresses what happens while a crypto token is caught by securities laws and when that ends. It also provides two fundraising exemptions, one a variation on the Regulation A exemption. In March the SEC provided an interpretation on which this rulemaking is largely based.
Why is the SEC now pursuing rulemaking, given it already provided the interpretation? The interpretation only clarifies the stance of the current SEC. A future Gensler-like SEC could find a token issuer at fault for relying on an interpretation, but not for relying on a rule. That said, the rules will not protect an issuer from third party litigation. All of this is now needed because of the delay in the progress of the CLARITY Act.
In a video address, SEC Chair Atkins referred to the previous SEC and its handling of the crypto sector which forced many startups offshore. “The United States must and will lead,” he said. “Our new rule proposal, Regulation Crypto Assets, will ensure that we do. Let me be clear. The SEC continues to support congressional work on the CLARITY Act. And we expect to see the bill reach the President’s desk. Under our current statutory authority, we are acting. The work before us is too important.”
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