Binance Faces Scrutiny After Russia Obtained Data on Ukrainian Donor

• Hopes that regulators could move ahead with crypto rules if the Clarity Act stalls are also losing momentum.
• The U.S. Securities and Exchange Commission abruptly called off an open meeting planned for last Friday. Commissioners were expected to consider the proposed Reg Crypto framework and potentially introduce part of the agency’s long-awaited innovation exemption. The cancellation appears to be connected to uncertainty around the Clarity Act.

Crypto regulation remains on hold

• The SEC had announced earlier that commissioners would publicly discuss Reg Crypto, a proposed framework covering how companies could raise money through token offerings and potentially move certain digital assets outside the SEC’s regulatory scope.
• Industry sources had also said the agency was preparing to release at least part of its innovation exemption, which was expected to clarify how issuers of tokenized securities could manage their underlying assets.
• Neither measure was released as planned.

The Clarity Act factor

• Earlier this month, it became increasingly likely that the Digital Asset Market Clarity Act would not receive a Senate vote before the August recess. That prompted some industry participants to suggest that regulators could advance their own rules if Congress failed to act.
• Regulatory measures, however, would be less durable than legislation. SEC and CFTC rules could be challenged in court or reversed by a future administration, while congressional legislation would generally provide a more lasting framework.

Rulemaking could take years

• For regulators to establish a framework before political leadership changes, the SEC and CFTC would need to complete the rulemaking process relatively quickly.
• That now looks less certain. The SEC said late Thursday that it had canceled the meeting and would schedule it for another date.
• The agency has also reportedly put its innovation exemption on an indefinite hold.
• Sources familiar with the matter told CoinDesk that concerns about the Clarity Act contributed to the decision. The White House and lawmakers reportedly worry that separate SEC action could interfere with negotiations over the legislation ahead of the Senate’s expected initial vote next month.
• This could push meaningful SEC action beyond the Senate’s next break, when lawmakers are expected to return in early October.
• Even if the agency resumes work then, new regulations would not arrive immediately. The SEC would need to seek public comments, evaluate responses, issue revised proposals and eventually finalize the rules, followed by an implementation period for affected companies.
• One industry source estimated that the rulemaking process could take nearly a year, with implementation adding another year. That timeline could bring the process close to a new presidential administration, potentially leaving any resulting regulatory framework vulnerable to changes under new leadership.