The SEC meeting that wasn't: why the regulatory route just got slower too
A commentary on the SEC's abrupt cancellation of its Reg Crypto meeting. With the Clarity Act stalled and the innovation exemption shelved indefinitely, the fallback plan for crypto rules now looks as slow as the legislation it was meant to replace.
The U.S. Securities and Exchange Commission abruptly cancelled a planned meeting last Friday at which it was due to advance its Reg Crypto rulemaking and, separately, unveil its repeatedly delayed innovation exemption. The pause appears to trace back to the Clarity Act.
Early last week the commission announced it would hold an open meeting where commissioners would discuss the Reg Crypto proposal, which sets out how companies could raise funds using tokens and eventually move outside SEC jurisdiction if they issue their own digital assets. Industry sources said the SEC was also set to unveil at least part of its innovation exemption, which would address to some extent how security-token issuers can handle underlying securities.
Earlier this month, as it became clear that the Digital Asset Market Clarity Act would not get a vote before the Senate's August recess, industry participants suggested that if Congress would not act, regulators could. The substitute was never going to be equivalent: regulatory action can be challenged in court and is easier for a subsequent administration to undo than legislation. The argument was that entrenched regulations would still be difficult to reverse in practice.
That argument presupposes something that is not guaranteed — that the SEC and the CFTC can actually finalise proposed rules in time for those rules to settle before a future commission changes its mind.
Late Thursday, the SEC announced it was cancelling the planned meeting and would reschedule at a later date. Reporting the same day indicated the commission was also holding off on rolling out the innovation exemption indefinitely.
People familiar with the situation said concerns about the Clarity Act drove the postponement. The White House and lawmakers are specifically worried that any SEC action could further complicate ongoing negotiations over the bill ahead of the Senate's first vote on it next month.
That sequencing suggests there may be no further action from the SEC until after the Senate breaks again in early October.
Timing is the second problem. Formal rulemaking is slow by construction: the SEC will solicit and incorporate public feedback on its proposals, publish revised proposed rules and eventually finalise them, after which companies get an implementation period to come into compliance.
One industry source put the rulemaking phase alone at close to a year, followed by another year for implementation. That timeline carries the industry very close to the next presidential administration — the point at which any final framework becomes easier to undo.
The fallback, in other words, inherits the vulnerability it was supposed to route around. Waiting for Congress was slow and uncertain; waiting for the regulators now looks slow and uncertain on a similar horizon. Readers tracking this should watch two dates rather than one: the Senate's first Clarity Act vote next month, and whether the SEC reschedules its meeting after the early-October recess.