#SECActsAsCLARITYWaits

Original author: Xiaobing On the evening of August 11, the SEC announced: this Friday (August 14) at 10 a.m., the Commission will hold a public meeting with only one agenda item: to vote on whether to formally propose a "customized issuance system" for crypto asset investment contracts (Regulation Crypto). This is the first formal crypto rulemaking since Paul Atkins became SEC Chairman, and there are only three working days from the announcement to the meeting. All three commissioners are Republicans, and the step is expected to be approved. But it should be clear: Friday's vote is to decide "whether to issue the proposal and solicit public comments," not the final rule. After the proposal is published, there is usually a 60 to 90-day public comment period, after which the SEC will revise based on feedback. The final rule will not take effect until at the earliest 2027. For the market, the signal is more important than the timeline. Where is the CLARITY Act stuck? The background is the legislative deadlock in Congress. The CLARITY Act (Digital Asset Market Clarity Act) is currently the closest crypto market structure legislation to becoming law in the U.S. The House passed it in July 2025 with a vote of 294:134, and the Senate Banking Committee passed it in May this year with a vote of 15:9. It seemed to be smooth sailing, but it got stuck at the full Senate vote. Senate Majority Leader Thune originally planned to push for a vote before the August recess. On August 6, he told reporters that Democrats insisted on not voting. At 4:52 a.m. on August 8, at the end of an all-night session, Thune submitted a procedural motion to postpone the vote to 2:15 p.m. on September 15, the first day senators return from recess. The reasons for the deadlock are very specific. Three contentious points remain unresolved: details of anti-money laundering and enforcement provisions, regulatory jurisdiction over stablecoin yields, and government ethics provisions involving presidential crypto asset holdings. Elizabeth Warren's stance represents the Democratic opposition, saying this version of the bill is "written by the crypto industry, for the crypto industry." A vote requires 60 votes. Republicans hold 53 seats, so at least 7 Democrats need to cross party lines. TD Cowen analyst Jaret Seiberg gave a 75% probability of failure in an August 10 research report. On Polymarket, the odds of the CLARITY Act being signed into law this year dropped from 82% in February to 21%, with over $5.5 million wagered on this outcome. SEC fills the gap The SEC's move follows the CLARITY Act's blockage. The SEC is not waiting for Congress; it is writing rules itself. TD Cowen characterizes this meeting as "the starting point of a series of rulemakings initiated by the SEC to provide regulatory certainty after the Senate stalemate." The framework of Regulation Crypto comes from Atkins' public speech in March. He proposed three types of exemptions: Startup exemption: allows early crypto projects to conduct limited financing under specific conditions without triggering full securities registration obligations. The reference figure Atkins used in March was no more than $75 million within 12 months. Financing exemption: provides a simplified path for larger fundraising, with information disclosure possibly closer to the format of crypto whitepapers rather than the full S-1 prospectus of listed companies. Investment contract safe harbor: this is the most critical part, potentially providing tokens a path to "exit securities regulation": when a project's development team no longer continuously leads network operations, the token may no longer be considered an investment contract and thus fall outside SEC jurisdiction. If the safe harbor clause is written into formal rules, it will fundamentally change the compliance logic of crypto projects. The core issue in the past was: once a token is deemed a security, it is always a security, and the project must indefinitely bear securities law obligations. The safe harbor logic is that the security attribute can fade as the project's decentralization increases. Two tracks Washington now has two parallel tracks advancing crypto regulation. The CLARITY Act follows the legislative track. Its advantages are the highest authority (law over administrative rules), the broadest coverage (defining SEC and CFTC jurisdiction), and the strongest durability. But it requires 60 votes, bipartisan support, resolution of three contentious points, and even if the procedural vote passes on September 15, there will still be debate, amendments, and final votes. The window to complete the entire process within the year is extremely narrow. Regulation Crypto follows the administrative rulemaking track. It does not require a congressional vote; the three Republican commissioners are enough to push it forward. Once formal rules are passed, they are harder for the next SEC to overturn than staff statements, because overturning formal rules requires the same notice-comment-vote process. The downside is its limited authority, covering only SEC jurisdiction, not CFTC, and it may face legal challenges. Former SEC official Brett Redfearn's reaction on X reflects industry sentiment well: "No need to wait for Congress to pass the CLARITY Act! It's time for regulators to take action themselves." The two tracks are not mutually exclusive. If the CLARITY Act eventually passes, it will replace Regulation Crypto; if CLARITY fails in Congress, Regulation Crypto is the best outcome the industry can get. The SEC is using administrative power to set a fallback plan for Congress. For the crypto industry, there will be no compliance obligation changes in the short term. Friday's vote is only the start of the rulemaking process; from proposal to final effect will take at least six months. But the impact at the signal level is immediate. Over the past year, the biggest uncertainty facing the crypto industry in the U.S. has been "when the rules will come." With Congress and the SEC advancing simultaneously, even if at different paces, it at least means Washington has moved from debating "whether to regulate crypto" to the practical stage of "how to regulate." September 15 and August 14, two dates, two tracks, one direction.