US agencies propose crypto rules after Clarity Act stalls

US agencies have embarked on a ‘legislation by regulation’ approach to crypto assets after a vote on the Clarity Act stalled in the Senate, the upper house of Congress.

On August 18, the US Securities and Exchange Commission (SEC) proposed new crypto regulations that would exempt firms from certain securities laws. On the same day, the Financial Accounting Standards Board (FSAB) proposed standards by which stablecoins could be considered cash-equivalent.

The FSAB’s proposals – which are open to comment until November 19 – highlight that unless an entity has an account directly with a stablecoin issuer, stablecoins are not considered cash-equivalent if the only means of redemption is via the secondary markets.

SEC chairman Paul Atkins said his agency is striving to “onshore innovation in crypto asset markets for generations to come” by providing market participants with “clear pathways to raise capital under the federal securities laws”.

The SEC’s proposals would allow a one-time exemption for crypto firms to issue $5 million in tokens over four years. A second exemption would allow firms to issue $75 million in tokens every 12 months, subject to additional reporting requirements.

The commission’s proposals would also allow for conditional exemptions to the rule that digital assets should be treated like securities, depending on how the assets are managed. The proposals are open for comment for 60 days.

This month the Clarity Act – which proposed dividing regulation of crypto assets between the SEC and the Commodity Futures Trading Commission (CFTC) – stalled in the Senate. After it was revealed in July that US president Donald Trump had made more than $1 billion from crypto ventures during his first year back in office, Democrats pushed for amendments to the act that would prohibit the president and other government officials from profiting from digital asset schemes. Crypto firms also lobbied against demands by banks for restrictions on reward programmes that have enabled crypto investors to get around the limits on yields.

CFTC chairman Michael Selig said the agency would meet tomorrow (August 20) to discuss crypto asset regulation, as well as artificial intelligence and prediction markets.

The Senate, on summer recess since August 7, will reconvene on September 14.