SEC Proposes New Rule for Crypto Regulation Amid Clarity Act Gridlock

The Clarity Act is on hold in Congress, but government regulators are pressing forward with their own framework for crypto regulation.

The SEC has proposed its first permanent digital-asset rule to govern the crypto industry, which would exempt token sales of up to $5 million over four years from registration under the Securities Act of 1933. The new rule would also allow tokens to shed their status as a security if their issuer ended managerial work related to the token.

The proposed rules do not directly affect the major crypto assets, such as Bitcoin and Ethereum, but could have long-term benefits for the industry. If implemented, they could lead to more inflows into those assets over time as financial institutions become more comfortable underwriting legal risks associated with crypto investments.