An Aug. 19 White House meeting involving at least six crypto and prediction-market firms has brought institutional settlement into focus as Lynq CEO Jerald David warns that regulation cannot make cash and collateral move around the clock.

Lynq CEO Jerald David told crypto.news that clearer rules would remove only one barrier facing financial institutions as digital assets, tokenized securities, and traditional markets become more closely connected.

Once an institution completes a trade, it must still fund the position, deliver cash, and move any required collateral. According to David, each step becomes more difficult when firms use several exchanges, counterparties, and forms of money across markets that remain open overnight and through weekends.

“I think regulation is obviously a big part of the conversation, but for institutions there is a very practical layer underneath it,” David said.

The comments come before a reported White House meeting involving crypto companies, prediction-market operators, regulators, and traditional financial firms. As previously reported in August, Coinbase, Ripple, a16z, Chainlink, Paradigm, and Kalshi are among the expected participants.

President Donald Trump, SEC Chair Paul Atkins, and CFTC Chair Michael Selig may also participate, according to people familiar with the plans. Neither the White House nor the regulators had published a formal participant list or detailed agenda when the meeting was reported.

Crypto regulation leaves an operational problem unresolved

Washington’s attention has centered on rules governing issuers, trading platforms, and the agencies responsible for supervising digital assets. David said institutions face another problem beneath the legal framework because funding and settlement systems do not always follow the hours kept by crypto markets.

“Once you make a trade, you still have to fund it, move collateral and settle it. That sounds straightforward, but it gets much harder when you are dealing with multiple venues, counterparties and different forms of money, especially in markets that trade around the clock.”

Crypto exchanges commonly remain open 24 hours a day, including weekends and public holidays. Many banking and securities systems, however, rely on business-day schedules, cutoff times, and separate settlement processes.

According to David, the difference can leave an institution able to enter a trade while lacking immediate access to the cash or collateral needed to complete it. Firms may respond by keeping funds at several venues, although doing so can leave capital unused and increase exposure to individual counterparties.

At the same time, different forms of digital money are entering institutional markets. Stablecoins, tokenized bank deposits, tokenized money-market funds, and conventional bank balances can perform separate roles, but David said institutions need systems that let value move between counterparties when a payment or margin call becomes due.

US rules are progressing faster than settlement systems

The US Treasury added another part of the regulatory framework on Aug. 17 by proposing rules for Section 3 of the GENIUS Act. The proposal would define when a payment stablecoin is issued in the United States and when a digital asset company offers or sells one to a US customer.

Under the proposal, companies would generally need an appropriate federal or state license to issue payment stablecoins in the country from Jan. 18, 2027. From July 18, 2028, digital asset service providers would generally be barred from offering payment stablecoins to US customers unless a licensed issuer issued them.

The department has opened a 60-day public comment period after publication in the Federal Register. A recent Treasury rules report covered how the definitions would also affect foreign issuers and platforms making their tokens available in the United States.

Treasury’s proposal addresses who may issue and distribute payment stablecoins, but it does not create a common settlement network connecting every bank, exchange, broker, and custodian. David’s comments concern that separate operational layer, including the movement of money between regulated entities after a transaction has been agreed.

Federal Reserve infrastructure shows how operating schedules can differ. FedNow processes instant payments continuously for participating financial institutions, while Fedwire handles large-value bank transfers during defined operating windows.

The Federal Reserve says Fedwire currently runs for 22 hours per business day from Monday through Friday, excluding designated holidays. An expansion planned for 2028 or later will add Sundays and weekday holidays, but the service will continue to close for two hours each operating day and will not operate on Saturdays.

Tokenized markets increase demand for 24/7 collateral

Continuous settlement has become more important as US regulators consider allowing more traditional assets to trade on blockchain networks. An Aug. 17 report on the SEC’s tokenized trading plans said the agency was preparing a limited route through which qualified platforms could test round-the-clock trading in tokenized US stocks.

No final exemption, eligibility standard, or launch date has been announced. SEC officials have also maintained that putting shares on a blockchain does not remove them from federal securities laws or existing investor-protection requirements.

For settlement providers, extending trading hours creates a related demand for cash and collateral outside the normal business day. DTCC said in May that financial firms commonly maintain excess collateral and liquidity buffers because assets may not be available exactly when they are needed.

According to DTCC, tokenized collateral could allow firms to mobilize assets on demand instead of placing extra funds at several locations in advance. The market infrastructure provider has also worked with Chainlink on a system designed to support round-the-clock collateral management across traditional markets and blockchain networks.

A separate project involving BMO, CME Group, and Google Cloud shows how banks are approaching the same issue. As covered in March, BMO planned to let institutional clients convert US dollars into tokenized cash for derivatives, margin, and continuous settlement.

The full BMO service was scheduled for the second half of 2026, subject to regulatory approval. CME said the arrangement could let clients move tokenized cash for margin and collateral purposes without waiting for ordinary banking windows.

Pre-positioned liquidity carries costs and risks

David said mismatched operating hours can force institutions to place liquidity at every exchange or counterparty they expect to use. Money held in several locations may be unavailable for another trade, while direct exposure to a venue can increase if the institution must fund an account before executing transactions.

“So even if the regulatory framework becomes clearer, you still have this mismatch between how the market trades and how capital actually moves,” he said.

Lynq operates a private institutional network through tZERO Securities, an SEC-registered broker-dealer. According to the company, participants can make real-time transfers within the network, while client investments are maintained in segregated accounts and users complete know-your-customer and anti-money-laundering checks.

The company said in February that assets held through its platform had passed $89 million and that it worked with more than 30 institutional digital asset firms, including exchanges, custodians, market makers, and over-the-counter trading desks.

Lynq also introduced a collateral-lock feature in March that allows users to designate assets as collateral without transferring them away from the network, according to the company. The feature prevents pledged assets from being used twice while allowing institutions to release and redeploy them after the related obligation ends.

Citi has unveiled its Custody+ platform and confirmed plans to launch institutional digital asset custody later in 2026, beginning with Bitcoin.

Business Wire reported on Aug. 18 that Citi Investor Services had launched Custody+, a collection of near- and real-time custody services for institutional clients operating across continuous markets and shorter settlement cycles.

The rollout has also given Citi a firm timetable for its digital asset custody business. According to the bank, the service is expected to become operational later this year and will initially support Bitcoin (BTC).

Rather than running Bitcoin custody through a separate product, Citi plans to build the service on its common digital asset architecture. Institutional clients will be able to access traditional securities and cryptocurrency custody through the same framework, although the bank has not disclosed a launch date or named any clients.

Citi Custody+ combines Bitcoin and securities services

Custody+ replaces a standard custody model with modular services that clients can adapt to their own operating systems and workflows. Citi’s existing custody network serves customers in more than 100 markets, including 62 markets where the bank operates its own infrastructure.

Digital asset custody will sit alongside real-time settlement, liquidity management, foreign exchange services, and market data. Under the proposed structure, an asset manager holding Bitcoin and conventional securities could use one Citi environment for custody services instead of dealing with separate operating systems.

Earlier crypto.news coverage detailed Citi’s plans to connect Bitcoin with the reporting, tax, control, and portfolio systems already used for traditional assets. The February report said the bank was developing key management and wallet infrastructure as part of a 2026 institutional rollout.

Citi had spent two to three years designing the custody service by October 2025, according to Biswarup Chatterjee, the bank’s global head of partnerships and innovation. At the time, Chatterjee said the bank was considering a mix of internally built technology and third-party systems for different assets and client groups.

“We may have certain solutions that are completely designed and built in-house that are targeted towards certain assets and certain segment of our clients,” Chatterjee told CNBC, adding that Citi could use a third-party solution for other assets.

The latest announcement identifies Bitcoin as the first supported cryptocurrency but does not say which assets could follow. Citi has also not specified whether its custody technology will be entirely internal or retain the hybrid model discussed in 2025.

Real-time processing supports Citi’s Bitcoin custody plan

Custody+ has arrived after Citi completed the U.S. rollout of its patented Single Event Processing technology, known as SEP. The system processes asset-servicing transactions through one continuous flow across Citi’s domestic and international custody networks.

More than 80% of the bank’s total event volume is now handled in real time, according to Citi. Within the United States, SEP has cut processing times for voluntary corporate actions by as much as 92%, while 96% of voluntary events are completed in under two hours.

Instant settlement services connect client instructions with final settlement at central securities depositories. Citi said its integrated ledger and real-time data also give clients transaction visibility across the bank’s 62 proprietary custody markets.

Alongside settlement, the platform provides automated hedging and real-time foreign exchange execution. Cash tools include instant position updates, liquidity sweeps, funding services, and cash-balance projections linked to custody transactions.

Chris Cox, head of Investor Services at Citi, said the bank’s Services business invests more than $2 billion annually in its platform strategy, with spending focused on speed, scale and availability.

“Custody+ is a clear example of this investment as we build infrastructure to eliminate latency and drag for institutional investor clients,” Cox said.

Cox added that Citi was combining its international network with data and technology to support institutions that need continuous market access, transparency, and precise transaction processing.

Citi Token Services moves deposits around the clock

Operating alongside the planned Bitcoin service, Citi Token Services already supports the near-instant transfer of tokenized deposits at any time of day across selected Citi markets. The product applies blockchain-based settlement to commercial bank deposits rather than using a publicly issued stablecoin.

Custody+ also includes tax-document processing supported by artificial intelligence. Citi said the technology has reduced document processing times by as much as 70%, while the bank’s Market Guide platform supplies regulatory and operational information to clients in more than 100 locations.

Cloud sharing and application programming interfaces give institutions access to Citi data for their own analytics and AI systems. Under the platform’s white-label option, financial companies can also use Citi’s infrastructure for transaction instructions, workflow management, reporting, and market information delivered to their customers.

“Custody+ is the product of a multi-year commitment to building infrastructure that matches the speed of our clients’ strategies,” Amit Agarwal, head of Custody at Citi Investor Services, said.

Agarwal said the individual services were designed to help clients simplify their operating models as custody operations became more complex.

Citi expands its institutional tokenization business

Beyond Bitcoin, Citi has been developing products that place traditional financial claims on blockchain-based systems. In June, the bank disclosed plans to offer wealthy and institutional clients tokenized depositary receipts linked to shares in private companies.

The private-share platform will initially be offered to investors outside the United States, with Citi serving as both issuer and custodian. The bank reportedly plans to consider U.S. access if regulatory conditions permit.

Under the planned structure, clients would receive regulated exposure to private businesses through Citi-issued instruments rather than purchasing company shares directly. Citi has held talks with large private companies but has not publicly identified the prospective participants.

Private businesses such as OpenAI and Anthropic have attracted investor demand while remaining outside public stock markets. However, the Citi service would be limited to clients who already meet the relevant institutional or wealth requirements.

The bank’s tokenization work also follows a June research report that placed the global tokenized securities market at about $17 billion. Citi’s tokenization market forecast projected a base-case increase to $5.5 trillion by 2030, with estimates ranging from $2.7 trillion to $8.2 trillion.

For the U.S. market, Citi estimated that 10% of Treasury bills and 3% of publicly traded stocks could become tokenized by 2030. The bank also projected that stablecoin growth could generate about $1 trillion in additional demand for U.S. Treasuries.

Citi’s research estimated that moving 10% of everyday U.S. investors to digital trading platforms could create $2.6 trillion in demand for digital stocks. Its forecast covered tokenized Treasury bills, equities, funds and other financial instruments, while the newly announced Custody+ platform will initially extend native digital asset custody only to Bitcoin.

Interstice Digital has introduced a non-custodial cross-chain swap engine designed to connect the Canton Network with major public ecosystems, including Ethereum and Solana, using FalconX as its liquidity layer. The company says the system can route token swaps across all four networks without Interstice holding users’ assets or submitting transactions on their behalf.

The announcement positions Canton—an institutional-focused blockchain with privacy and permissioning controls—as a place where tokenized assets can interact with broader liquidity available on public chains. While Interstice did not disclose which tokens are supported at launch or provide any transaction volume metrics, the integration adds another piece to Canton’s push to make tokenized finance more usable for market participants.

Key takeaways

• Non-custodial design: Interstice says it will not take custody or transact on users’ behalf.
• Cross-chain routing across major networks: Canton is set to be connected with Ethereum, Solana, and Robinhood Chain via FalconX.
• FalconX supplies liquidity for swaps: FalconX, described as a digital asset prime brokerage for institutions, underwrites the engine’s liquidity.
• Institutional tokenization momentum continues on Canton: Prior activity on the network includes tokenized US Treasuries and institutional stablecoin deployments.

How Interstice’s cross-chain swap engine is meant to work

According to Interstice’s announcement, the swap engine is built as a non-custodial mechanism. In practical terms, this means Interstice is not designed to hold user funds, and it is not presented as a service that executes trades on behalf of users. Instead, the engine is intended to enable cross-chain swaps while users retain control of their assets.

Liquidity is provided through FalconX, which the company describes as serving institutional investors through a prime-brokerage framework. The engine’s stated goal is to give users a path between tokenized assets on Canton—where institutional finance use cases have been expanding—and liquidity on public blockchains such as Ethereum and Solana.

Interstice did not specify which assets will be supported first. It also did not publish any swap volume figures tied to the engine, leaving market participants to assess adoption only after more operational details emerge.

Canton’s institutional focus: tokenized settlement and privacy controls

Canton Network is described as a blockchain built for institutional finance, emphasizing privacy and permissioning to align with regulated transaction needs. The network’s ecosystem includes major financial institutions, and several publicized projects suggest that Canton is moving beyond experimentation toward more established workflows for tokenized assets and settlement.

The swap engine’s relevance to investors and market participants is straightforward: the more a tokenized asset ecosystem can connect to external liquidity, the more practical it becomes for trading and hedging. Canton’s value proposition has largely centered on regulated tokenization and settlement. Interstice’s announcement attempts to address the next bottleneck—how those tokenized assets can interact efficiently with liquidity pools and trading venues on mainstream public chains.

Recent activity on Canton underscores the push toward tradable tokenized assets

The cross-chain swap engine arrives as traditional financial institutions increase their engagement with Canton-based tokenization and blockchain settlement.

In July, electronic trading platform Tradeweb executed an onchain US Treasury trade on Canton. In that transaction, Franklin Templeton transferred a tokenized Treasury security to Virtu Financial in exchange for tokenized cash. Tradeweb said it was the first real-time purchase and sale of a tokenized US Treasury settled against USDCx, a USDC-backed stablecoin issued on Canton. Other participants included Societe Generale, Digital Asset, and Blockdaemon. Earlier coverage from Cointelegraph described the broader mechanics of that real-time flow, including how Tradeweb handled execution and price discovery while Canton synchronized settlement across the tokenized security and tokenized cash leg.

Beyond tokenized Treasuries, Societe Generale has also deployed euro- and dollar-denominated stablecoins on Canton for tokenized collateral, repo financing, and institutional settlement. Separate reporting noted that Visa tested private stablecoin settlement on the network, reflecting growing interest in privacy-preserving settlement models for stablecoins.

Additional initiatives mentioned alongside Canton’s ecosystem include a Japanese government bond collateral pilot involving Mizuho and Nomura, and S&P Dow Jones Indices placing its iBoxx US Treasuries Index on Canton. Collectively, these efforts suggest that Canton is building a portfolio of tokenized instruments—collateral, stablecoins, and indices—where cross-chain interoperability becomes increasingly valuable.

Why the FalconX liquidity layer matters—and what to watch next

Cross-chain swaps can look simple on paper, but liquidity is often the determining factor for whether users can actually execute trades without friction. Interstice’s decision to use FalconX as the liquidity provider signals an attempt to reduce that gap between tokenized assets on Canton and tradable liquidity on public chains.

Still, important details remain unclear. Interstice has not disclosed which specific assets will be supported first, nor has it offered any early metrics that would help gauge real-world demand or execution quality. For traders and institutions evaluating Canton’s expansion, those missing specifics will likely matter more than the headline functionality.

Going forward, market participants should watch for (1) the initial asset list and stablecoin or token types included in the swap routing, (2) operational transparency such as settlement behavior and failure modes, and (3) whether the engine’s integration leads to measurable increases in active liquidity or repeat settlement activity between Canton-based tokenized assets and public chain venues.

Bitcoin has risen above $64,600 after U.S. President Donald Trump said Washington is not holding talks with Iran, while conflicting claims over the Strait of Hormuz kept oil above $91 per barrel.

In an Aug. 18 Truth Social post, Trump said the United States and Iran were not holding discussions and had no negotiations scheduled, contradicting recent reports that diplomatic contacts could produce another temporary agreement.

“The Naval Blockade remains in full force and effect. The Hormuz Strait is open and operating,” Trump wrote.

The president also said all water mines in the strait had been removed or detonated. Iran disputed his account, with chief negotiator Mohammad Baqer Qalibaf saying Tehran would keep the waterway closed until the United States fulfilled conditions contained in a June interim agreement, according to Reuters.

According to Iran’s chief negotiator, Mohammad Baqer Qalibaf, Tehran’s conditions include lifting the U.S. blockade of Iranian ports, removing oil sanctions, releasing frozen Iranian assets, and ending U.S. military threats and operations. The memorandum, signed on June 17, established a 60-day period for negotiations toward a broader agreement that would include Iran’s nuclear program.

Its negotiating window has now expired without an extension.

Trump says Hormuz is open as Iran rejects the claim

Trump’s account of normal operations in the Strait of Hormuz remains at odds with shipping activity and statements from Tehran.

Although some vessels continue to pass through the route, Reuters reported limited traffic and a recent incident in which a ship was struck by an unidentified projectile. Data cited by Fox News showed 28 confirmed crossings from Friday through Sunday, compared with an average of about 130 ships per day before the war began in February.

Iranian officials have said passage will remain restricted until Washington honors the June agreement. Trump, however, said on Aug. 17 that Iran wanted a deal but would not accept the terms he considered necessary.

The dispute followed an earlier Truth Social post in which Trump shared a map labeling the strait as “New U.S. Territory.” Iran rejected the territorial claim, while Trump maintained that U.S. naval forces controlled the passage.

U.S. and Israeli forces launched attacks on Iran in late February, starting a conflict that is approaching its sixth month. According to Reuters, Tehran adopted what one senior official described as a “fully offensive” position on Aug. 17 after diplomacy failed to produce another agreement.

No new major Iranian attack had been reported immediately after the statement.

The Strait of Hormuz carried roughly one-fifth of global oil and liquefied natural gas supplies before the conflict. Any sustained restriction therefore affects crude availability, shipping costs, and energy prices paid by American households and businesses.

Bitcoin price recovers while oil stays above $91

Bitcoin (BTC) was trading at $64,611 at the time of writing, up about 0.6% from its previous close. The cryptocurrency had moved between an intraday low of $64,005 and a high of $64,926, placing the psychological $65,000 level within reach.

The advance came even as oil prices increased for a third consecutive session. Reuters reported that Brent crude rose 0.7% to $91.46 per barrel, while U.S. West Texas Intermediate gained 0.9% to $85.25.

Earlier in August, Bitcoin faced downside pressure when attacks on tankers near Hormuz lifted energy prices and strengthened demand for the U.S. dollar. BTC fell as low as $62,466 on July 31 after failing to hold above $65,000, while its four-hour chart placed the $62,000–$63,000 area at the center of the market’s next move.

The current recovery has brought Bitcoin back toward the same resistance region. A sustained break above $65,000 has not yet occurred, with Tuesday’s high stopping at $64,926.

For U.S. investors, the oil move matters because higher fuel and transport costs can feed into inflation data. Federal Reserve officials consider inflation when deciding interest rates, while elevated borrowing costs can reduce investor demand for assets such as Bitcoin and technology stocks.

U.S. equities remained under pressure during Tuesday’s session. The Nasdaq Composite fell about 1.4%, the S&P 500 lost 0.6%, and the Dow Jones Industrial Average slipped 0.1%, according to The Wall Street Journal. The publication also reported that the 10-year Treasury yield reached 4.72%, while the 30-year yield climbed to 5.33%, its highest level since 2007.

Strategy pauses Bitcoin sales after two weeks

Bitcoin also received relief from the absence of another sale by Strategy, the largest publicly traded corporate holder of the asset.

According to an Aug. 17 filing with the U.S. Securities and Exchange Commission, Strategy made no Bitcoin purchases or sales between Aug. 10 and Aug. 16. Its holdings remained unchanged at 840,447 BTC, acquired for an aggregate $63.36 billion at an average price of $75,385 per coin.

As crypto.news reported on Monday, the company raised $333.7 million by selling 3.46 million common shares during the week but did not use the proceeds to acquire more Bitcoin.

Strategy’s filing ended two consecutive weeks of BTC disposals. During the previous week, the company sold 1,690 BTC for about $108.6 million after selling roughly $105 million of Bitcoin one week earlier.

Because Strategy trades on the Nasdaq under the MSTR ticker, its Bitcoin decisions affect U.S. shareholders who use the stock as an indirect form of crypto exposure. The company’s latest filing also showed that its average Bitcoin purchase price remained above BTC’s current market value.

Strategy used its recent financing activity to increase its U.S. dollar reserves and repurchase preferred shares. Its Aug. 17 filing said the company bought back about $132.2 million of STRC preferred stock during the week.

White House meeting puts U.S. crypto rules in focus

Washington’s digital-asset policy calendar has supplied another point of interest for Bitcoin traders.

A White House meeting scheduled for Aug. 19 is expected to include representatives from Coinbase, Ripple, a16z, Chainlink, Paradigm, Kalshi, and the Digital Chamber. SEC Chair Paul Atkins and CFTC Chair Michael Selig are also expected to participate, according to people familiar with the plans.

The administration had not published a formal agenda or confirmed the final participant list at the time of reporting. Trump’s attendance had also not been officially announced, although Semafor reported that he was expected to take part.

The White House gathering comes as the Digital Asset Market CLARITY Act remains stalled in the Senate. The legislation would divide federal oversight of digital assets between the SEC and CFTC, placing qualifying digital commodity spot markets under the CFTC while keeping crypto securities within the SEC’s authority.

The House passed its version in July 2025 by a 294–134 vote. Senate progress has slowed over disagreements involving government ethics, decentralized finance, stablecoin rewards, and financial crime controls.

Polymarket traders placed the bill’s chance of becoming law in 2026 at about 20% on Aug. 17, down from more than 80% earlier in the year. Separately, the platform’s odds of at least one Federal Reserve rate increase in 2026 fell to 49% from a recent level above 60%.

Earlier in August, rate-hike odds reached 64% after Federal Reserve Bank of Minneapolis President Neel Kashkari warned that inflation remained too high. The Federal Reserve held its target range at 3.50%–3.75% in July, when three officials supported a quarter-point increase.

This is no ordinary nap. As I drift off, vibrations strum my fingertips, and low tones play in the earbuds. Between these stimuli, strange thoughts move through my semi-conscious mind, the kind of free association that feels normal in sleep and bizarre in life. Names, words, rabbits, phone booths, train announcements—but just when I start to go under, the lights, tones, and vibrations kick in and wake me back up. I try to keep responding; after a long, dark interval, I am so tired that I stop, and then I am dreaming.

I am with my son, digging in the back garden of a brick row house. We are burying something in the lawn. I respond to a few stimuli, then I have the impression that someone in a position of authority—a man with a mustache?—is reprimanding me for failing to keep something level. Then I am awake. The electrodes taped to my face are suddenly palpable.

The U.S. Securities and Exchange Commission (SEC) has unveiled proposed rule changes aimed at giving clearer regulatory treatment to certain crypto assets that the agency views as investment contracts. The announcement comes after Congress failed to advance a major market-structure bill before lawmakers entered a month-long recess, leaving the industry to navigate overlapping agency approaches.

In a Tuesday notice, the SEC said it is proposing a “clear and fit-for-purpose framework” for specific investment contracts involving crypto assets. The regulator framed the proposal as a “tailored securities offering regime” designed to let compliant issuers raise capital while maintaining investor protections.

Key takeaways

• The SEC’s proposal would create a tailored offering pathway for some crypto-related investment contracts, emphasizing investor protection obligations.
• There is no “innovation exemption” in the proposal—an element some market participants had expected to be included for tokenized or crypto-adjacent equity products.
• The SEC outlined token issuance limits under exemptions and stated that issuers would need to provide financial statements and ongoing reporting.
• The comment period is set at 60 days after the proposal is published in the Federal Register.
• The announcement lands amid stalled progress on the Digital Asset Market Clarity (CLARITY) Act, raising the prospect of continued regulatory patchwork.

SEC proposes a tailored securities offering regime for certain crypto assets

The SEC said the rules are intended to offer a “clear and fit-for-purpose framework” for “certain investment contracts involving crypto assets.” According to the agency, the approach would preserve investor protections while providing a more defined compliance route for issuers.

SEC Chair Paul Atkins linked the SEC’s rulemaking effort to the need for legislation, arguing that durable “rules of the road” require congressional action rather than agency-driven fixes that could later be overturned. In remarks cited alongside the proposal, Atkins said legislation remains “indispensable” for future-proofing regulatory guidance.

No innovation exemption—and new rules arrive as CLARITY stalls

A notable omission from the SEC’s proposal is an “innovation exemption” that had been expected by some observers, including in reporting about a possible carve-out for innovation-related structures tied to tokenized stock trading. The absence of that exemption makes the new SEC approach feel more incremental: rather than relaxing classification risk for a broader class of crypto-linked products, the proposal concentrates on providing a structured securities offering pathway where the SEC views investment-contract risk as present.

The timing also matters. The SEC’s notice followed closely after the U.S. Senate failed to advance the CLARITY Act, a bill widely discussed as a way to clarify how federal agencies would oversee and regulate crypto. With that legislation not moving forward, agencies have less congressional direction and more room to pursue their own frameworks—often creating uncertainty for market participants.

Exemptions, token issuance limits, and reporting obligations

According to the proposal, the SEC would provide exemptions for entities that issue tokens under defined caps. The notice describes limits of up to $5 million in tokens over a four-year period and up to $75 million during a 12-month period.

In addition, the SEC said it would include a safe harbor meant to exempt cryptocurrencies from being treated as “investment contracts.” While the details of how that safe harbor would apply are central to investor and issuer decision-making, the SEC’s stated goal is to reduce classification uncertainty for at least some categories of assets.

The SEC also indicated that token issuers would be required to make financial statements and would be subject to ongoing reporting requirements. For issuers evaluating whether they can structure token offerings in a way that reduces regulatory risk, these recurring disclosure duties could be as important as the stated issuance limits.

The SEC’s proposal is open for public feedback: the agency said the public will have 60 days to comment after the rules are published in the Federal Register.

Regulatory coordination pressure: SEC proposal before CFTC crypto meeting

The SEC’s action arrives ahead of a scheduled meeting of the U.S. Commodity Futures Trading Commission (CFTC) on crypto, AI, and prediction markets. The CFTC has said it planned to address areas where regulatory action can “complement” future congressional legislation.

This sequencing underscores the current dynamic in U.S. crypto regulation: when Congress does not deliver comprehensive market-structure reforms, agencies fill the gap—sometimes in ways that are difficult for issuers and exchanges to anticipate or map to a consistent national framework.

SEC Chair Atkins had been scheduled to speak at the Wyoming Blockchain Symposium on Tuesday, but canceled amid the SEC announcement. Separately, White House crypto adviser Patrick Witt told attendees at the event that regulators could act more aggressively if Congress cannot move forward on CLARITY—another signal that the regulatory environment may continue shifting even without new statutes.

CLARITY prospects as Senate calendar narrows

As the SEC moves forward with its own rulemaking, the prospects for the CLARITY Act depend on a tight legislative window. Before the Senate broke for August state work periods, Majority Leader John Thune filed cloture to take up the CLARITY bill when lawmakers return in mid-September.

After the August recess, senators reportedly have just 14 days in session before another break ahead of the November election. If a floor vote cannot be secured within that timeframe, the Senate would have another 22 days in session before 2027, when new members of Congress would be sworn in. That calendar structure could affect how quickly—if at all—CLARITY is resolved during the current Congress.

What to watch next

Issuers and investors should focus on how the SEC justifies the boundaries of its safe harbor, the mechanics behind the token issuance caps, and what ongoing reporting the proposal would require. With CLARITY still uncertain and comment periods now looming, the next signals to watch are how industry participants respond in filings—and whether the CFTC’s upcoming agenda further clarifies how crypto markets will be regulated across agencies.