Written by: Xiao Bing
On the evening of August 11th, the SEC issued an announcement: the Commission will hold an open meeting this Friday (August 14th) at 10:00 AM, with only one item on the agenda: to vote on whether to formally propose a "customized issuance regime" (Regulation Crypto) for crypto asset investment contracts.
This is the first formal crypto rulemaking since Paul Atkins assumed the role of SEC Chairman. The announcement provided only three business days' notice before the meeting.
All three commissioners are Republicans and are expected to approve this step. However, it is important to clarify: Friday's vote will decide "whether to release the proposal for public comment," not finalize the rule. After the proposal is published, there is typically a 60 to 90-day public comment period. The SEC will then revise the proposal based on feedback, with the earliest possible effective date not until 2027.
For the market, the signal is more important than the timeline.
Where is the CLARITY Act Stuck?
The background is the legislative stalemate in Congress.
The CLARITY Act (Clarity for Digital Assets Act) is the crypto market structure legislation in the US that is currently closest to becoming law. The House passed it in July 2025 by a vote of 294:134, and the Senate Banking Committee passed it this May by a vote of 15:9. It seemed to be sailing through, but it got stuck at the stage of a full Senate vote.
Senate Majority Leader Thune originally planned to push for a vote before the August recess. On August 6th, he told reporters that Democrats were insisting on not voting. At 4:52 AM on August 8th, Thune filed a procedural motion at the end of an overnight session, pushing the vote to 2:15 PM on September 15th, the first day senators return from their break.
The reasons for the holdup are specific. Three contentious points remain unresolved: the details of anti-money laundering and enforcement provisions, the regulatory jurisdiction over stablecoin yields, and government ethics provisions involving presidential holdings of crypto assets. Elizabeth Warren's stance represents the position of Democratic opposition, stating that this version of the bill "was written by the crypto industry, for the crypto industry."
Passage requires 60 votes. Republicans hold 53 seats, needing at least 7 Democrats to cross party lines. TD Cowen analyst Jaret Seiberg gave a 75% probability of failure in a research report on August 10th. On Polymarket, the odds of the CLARITY Act being signed into law this year have fallen from 82% in February to 21%, with over $5.5 million wagered on this outcome.
The SEC Fills the Void
The SEC's move followed closely on the heels of the CLARITY Act's roadblock. The SEC isn't waiting for Congress; it's writing the rules itself. TD Cowen characterized this meeting as "the starting point for a series of rulemakings the SEC is initiating to provide regulatory certainty after Senate shelving."
The framework for Regulation Crypto comes from Chairman Atkins' public speech in March. He proposed three types of exemptions at that time:
Entrepreneurial Exemption: Allows early-stage crypto projects to conduct limited fundraising under specific conditions without triggering full securities registration obligations. The reference number Atkins used in March was no more than $75 million within 12 months.
Fundraising Exemption: Provides a simplified path for larger-scale fundraising. Disclosure requirements might align more closely with the format of a crypto whitepaper rather than the full S-1 prospectus of a public company.
Investment Contract Safe Harbor: This is the most critical part, potentially providing a "pathway out of securities regulation" for tokens: when a project's development team is no longer continuously leading network operations, a token may no longer be considered an investment contract, thus falling outside SEC jurisdiction.
If the safe harbor provision is written into the final rule, it would fundamentally change the compliance logic for crypto projects. The core historical issue has been: once a token is deemed a security, it is always a security, and the issuer bears securities law obligations indefinitely. The logic of the safe harbor is that the security status can diminish as the project becomes more decentralized.
Two Tracks
Currently, there are two parallel tracks advancing crypto regulation in Washington.
The CLARITY Act follows the legislative track. Its advantages are the highest authority (law supersedes administrative rules), broadest coverage (simultaneously delineating jurisdiction for both the SEC and CFTC), and strongest permanence. However, it requires 60 votes, bipartisan support, resolution of the three contentious points, and even if it passes the procedural vote on September 15th, there are still debates, amendments, and final votes ahead, leaving an extremely narrow window to complete the entire process within the year.
Regulation Crypto follows the administrative rulemaking track. It does not require a Congressional vote; the three Republican commissioners are sufficient to advance it. Once a formal rule is passed, it is harder for a future SEC to overturn easily compared to staff guidance, as overturning a formal rule requires going through the same notice-and-comment voting process. Its disadvantages are its limited scope, covering only the SEC's jurisdiction (not involving the CFTC), and potential legal challenges.
Former SEC official Brett Redfearn's reaction on X is representative of industry sentiment: "No need to wait for Congress to pass CLARITY Act! Time for regulators to act on their own."
The two tracks are not mutually exclusive. If the CLARITY Act ultimately passes, it will supersede Regulation Crypto; if CLARITY fails in Congress, Regulation Crypto becomes the best outcome the industry can get. The SEC is using its administrative authority to create a fallback plan for Congress.
For the crypto industry, no compliance obligations will change in the short term. Friday's vote is just the starting point of the rulemaking process; it will take at least another six months from proposal to final effect.
However, the impact at the signaling level is immediate. Over the past year, the biggest uncertainty facing the crypto industry in the US has been "when will the rules actually come?" The fact that both Congress and the SEC are moving forward, even at different paces, at least means Washington has moved from debating "whether to regulate crypto" to the practical stage of "how to regulate it."
September 15th and August 14th, two dates, two tracks, one direction.
