What’s Behind the SEC’s New Crypto Proposal?

That’s been one of the central debates surrounding cryptocurrency in recent years: Which digital assets are securities, and which fall outside the Securities and Exchange Commission’s jurisdiction? Congress is still hashing out many of those details in the Clarity Act, but the SEC is moving ahead with its own framework.

This week, the SEC proposed new rules that would create exemptions for certain crypto issuers to raise capital without registering their offerings, while providing a potential path for some tokens to eventually fall outside federal securities laws. The crypto industry is viewing the proposal as a win. “[It’s] an important step toward the clear, fit-for-purpose rules digital asset markets in the United States have needed for years,” Blockchain Association CEO Summer Mersinger said.

What the SEC Is Proposing

The current SEC has made championing crypto one of its main priorities in an effort to reverse course from the last administration, which was criticized for “regulation by enforcement.” Its new proposal largely comes down to providing insight on two questions: When do securities laws apply to crypto, and how can issuers raise capital without facing the same requirements as traditional securities? If adopted: