U.S. SEC sets meeting to propose Reg Crypto to support certain digital assets offerings

U.S. SEC sets meeting to propose Reg Crypto to support certain digital assets offerings

The Securities and Exchange Commission will vote this week to start its first major crypto rulemaking process.

The U.S. Securities and Exchange Commission is about to act on its Regulation Crypto rulemaking, setting a meeting to propose the rule this week. The meeting will come just a week after the U.S. Senate left town without holding even a procedural vote on the Clarity Act, which is intended to explain how the SEC and its sister agency, the Commodity Futures Trading Commission, can oversee crypto.

The U.S. Securities and Exchange Commission is about to propose its first formal rule that sets more durable rules for crypto businesses — in this case, a regimented path for legal issuance of digital assets under "Regulation Crypto."

SEC Chairman Paul Atkins has long set the goal of this rulemaking as one of the major points of his crypto regulatory plan, and the agency has schedeuled August 14 for the meeting at which the three-member commission (all Republicans) will open the SEC proposal for public comment. The regulator issued a Monday night notice announcing the Friday meeting with unusually short notice, though it's been on the agency's agenda for some time.

The start of Reg Crypto's approval process — said to involved "a tailored offering regime for certain investment contracts" — follows closely on the heels of last week's failure of the Senate to begin key votes on the Digital Asset Market Clarity Act that was meant to give a legal foundation for crypto market rules in the U.S.

"We view this as the first of several rulemakings the SEC will undertake to provide regulatory certainty for crypto assets after the Senate failed before the August recess to advance the Clarity Act on crypto market structure," TD Cowen analyst Jaret Seiberg wrote in a client note sent after the SEC's notice.

The proposal is expected to give a path to crypto firms enabling them to raise capital for projects without triggering SEC registration requirements, and the businesses are also expected to be provided an exit path for getting clear of the agency's jurisdiction when they're not engaged in hands-on management of the projects anymore.

Before this, Atkins and the agency had rolled through a lengthy series of crypto policy statements meant to clarify its regulatory position on digital assets, but the staff statements have little long-term durability. A formal rulemaking would be more difficult to reverse in the future.

But the rule will likely take further months to develop and finalize. This first stage will come with a comment period — typically two or three months — and be followed by a potentially lengthy rewrite.

Reg Crypto would join some of the other significant steps the agency has taken or is still working on to foster the U.S. crypto industry. One of the major moves was a joint stance with the Commodity Futures Trading Commission on a "taxonomy" to define how they view various crypto assets and which jurisdictions they belong in. The agency is also still working on its tokenized securities approach, which Atkins routinely mentions as one of the SEC's marquee crypto maneuvers.

Atkins has often stated how important it'll be to have a law from Congress that sets out the guardrails for the crypto markets, but the lawmakers fell short in advancing the bill, which still has a narrow chance for action next month.

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