Summary
President Trump personally attended a White House crypto summit where SEC and CFTC chairs discussed a new regulatory framework. The SEC released a 402-page proposal returning to 1933 disclosure principles, no longer judging project merit for investors but requiring full information disclosure, providing the first clear legal path for crypto entrepreneurs to issue tokens and raise capital in the United States.
A Historic Regulatory Transformation
The U.S. Securities and Exchange Commission (SEC) recently released a 402-page crypto asset regulatory proposal marking a major shift in America's crypto regulatory framework. The proposal's core philosophy can be summarized in one sentence: require projects to clearly communicate and disclose risks, then let investors make their own judgments.
The proposal summary explicitly states: "The proposed issuance regime is designed to facilitate capital formation and accommodate innovation in crypto asset markets while ensuring investors are adequately protected and receive the information needed to make informed investment decisions." Behind this language lies a profound change in the SEC's regulatory philosophy.
To "accommodate innovation," the SEC proposed two exemption mechanisms allowing new crypto projects to issue tokens to users and investors without violating securities laws. This will be the most closely watched aspect: crypto founders can finally raise capital through token sales, and do so legally within the United States.
Returning to 1933's Regulatory Vision
The SEC's proposal is widely viewed as a return to the founding principle of "disclosure regulation" from 1933. This principle originated at the birth of U.S. securities law, when President Franklin D. Roosevelt clearly stated in his message to Congress:
"Of course the Federal Government cannot and should not take any action which might be construed as approving or guaranteeing that newly issued securities are sound in the sense that their value will be maintained or that the properties which they represent will earn profit. There is, however, an obligation upon us to insist that every issue of new securities to be sold in interstate commerce shall be accompanied by full publicity and information, and that no essentially important element attending the issue shall be concealed from the buying public."
This "disclosure regulation" philosophy contrasted sharply with the "merit regulation" adopted by most U.S. states at the time. Under merit regulation, regulators would judge securities based on their perceived quality as investments and could even block offerings they deemed overpriced or otherwise unfair to investors.
The SEC's first chairman, Joseph P. Kennedy, explained: "Now, gentlemen, the Securities Act does not make the Government a valuer. It does not offer advice; it does not express approval. You may ask: What does it do? The Act establishes a department to which executives of corporations must submit information, as required by questionnaires, and file it with the department. Before anyone asks you to invest in an enterprise, Washington must have on file a record of important facts which will guide your judgment."
This philosophy was inspired by legal scholar Louis Brandeis, who proposed in 1914 that securities should be regulated like food—the Federal Pure Food Act didn't guarantee food quality or price but empowered consumers to judge quality themselves by requiring ingredient disclosure. Brandeis's famous quote that "sunlight is said to be the best of disinfectants; electric light the most efficient policeman" became a classic expression of disclosure regulation philosophy.
Policy Signals from the White House Crypto Summit
On August 19, the White House convened a notable crypto industry summit held in the Eisenhower Executive Office Building, adjacent to the White House main building. President Trump was expected to attend, with SEC Chair Paul Atkins and CFTC Chair Michael Selig confirmed participants.
The invitation list covered core forces in the crypto industry: executives from Coinbase, Ripple, a16z (Andreessen Horowitz), Chainlink, Paradigm, Kalshi, Gemini, Robinhood, and Polymarket. Traditional finance giants were also invited, including Nasdaq, CME Group, Intercontinental Exchange (ICE), and DTCC. These traditional finance executives also serve on the CFTC's newly established Innovation Advisory Committee.
The summit's timing was significant. It coincided with a critical moment for the CLARITY Act (Digital Asset Market Clarity Act, H.R. 3633) advancing in the Senate. The bill aims to resolve a decade-long problem: drawing clear boundaries between SEC and CFTC jurisdiction over digital assets—which tokens are securities under SEC authority and which are commodities under CFTC authority.
The CLARITY Act passed the House in July 2025 with a vote of 294 to 134, with 78 Democrats voting in favor. In May 2026, the Senate Banking Committee advanced it 15 to 9. But the bill encountered resistance at the full floor vote stage. Senate Majority Leader John Thune filed a cloture motion before the August 8 recess, with a critical procedural vote scheduled for the afternoon of September 15, requiring 60 votes.
ETF industry commentator Nate Geraci commented on social media: "The administration isn't going to wait for the CLARITY Act. Securing support would be nice, but I think they've decided they're moving forward regardless. I predict this meeting will send that signal loud and clear."
Substantive Progress on Regulatory Clarity
The CLARITY Act's advancement process reveals the complex political realities facing U.S. crypto regulation. What's truly stalling the bill isn't market structure provisions but several sensitive political issues.
First is the matter of Trump's crypto assets. Senators Thom Tillis (Republican) and Ruben Gallego (Democrat) drafted a bipartisan ethics proposal requiring Trump to divest from crypto businesses and allowing state attorneys general to enforce restrictions on officials issuing digital assets. Trump has not yet approved this proposal. Republican Senator Cynthia Lummis, a lead bill negotiator, called giving state attorneys general enforcement power a Republican "red line."
Second is the stablecoin yield provision. Banking industry groups oppose allowing stablecoins to offer interest-like yields, arguing this blurs the line between payment tokens and deposit-like products, potentially challenging traditional banking services.
Despite legislative process challenges, the administrative branch's regulatory clarity process is accelerating. Trump stated at the summit that the U.S. government is discussing plans to accumulate substantial Bitcoin and other cryptocurrency reserves, a statement that sent strong policy signals to the market.
Far-Reaching Impact on the Crypto Industry
The SEC's regulatory proposal offers unprecedented opportunities for crypto entrepreneurs. Previously, U.S. crypto projects often faced regulatory uncertainty, with many companies choosing to relocate headquarters overseas or deliberately design products to avoid the U.S. market. Boundary ambiguity led U.S. crypto exchanges to frequently delist tokens, severely constraining innovation.
Under the new regulatory framework, crypto projects can legally issue tokens for fundraising as long as they meet "principles-based narrative disclosure" requirements. This means projects need to clearly explain:
- Project fundamentals and business model
- Token functionality and use cases
- Major risk factors involved
- Team background and qualifications
- Capital deployment plans
Importantly, the SEC made clear that securities law exemptions don't equal exemptions from other laws. Anti-fraud laws continue to apply, and "bad actors" will be prohibited from participating. This balanced design provides space for innovation while maintaining necessary investor protection mechanisms.
For institutional investors and custody service providers, improved regulatory clarity means clearer compliance pathways. When the regulatory framework shifts from "uncertain whether legal" to "how to operate legally," barriers to institutional capital entering crypto markets will significantly decrease. This has profound implications for the industry's mature development.
New Landscape in Global Regulatory Competition
The transformation of the U.S. regulatory framework will also reshape global crypto regulatory competition. In recent years, the EU's MiCA (Markets in Crypto-Assets) framework, Singapore's digital payment token framework, and others have attracted global crypto enterprises. America's prolonged regulatory uncertainty led many innovative companies to choose development in other jurisdictions.
Now, with the SEC returning to disclosure regulation principles, the U.S. is positioned to once again become a center of crypto innovation. This transformation affects not just token issuance but will ripple across crypto trading, custody, DeFi, and other sectors. Regulatory agencies in other countries will closely watch U.S. practice, potentially triggering a new round of regulatory framework adjustments.
Notably, regulatory clarity doesn't mean regulatory relaxation. Clear rules are often more conducive to long-term development than ambiguous oversight. When market participants all understand the rules of the game, compliance costs decrease, innovation directions become clearer, and investor protection becomes more effective.
Implications for Digital Asset Infrastructure
The shift toward disclosure-based regulation has significant implications for digital asset infrastructure providers. When regulatory frameworks prioritize transparency and information disclosure over subjective merit judgments, the role of custody providers, wallet services, and institutional infrastructure becomes more clearly defined.
L0084|For institutional-grade custody and wallet solutions, clearer regulatory pathways mean reduced compliance uncertainty. Service providers can now design products and services with greater confidence about regulatory expectations. The emphasis on disclosure rather than prohibition creates opportunities for compliant infrastructure that supports both innovation and investor protection. Institutional custody providers are developing compliance enablement tools to support this transparency-focused approach. Cobo's Screening app, for example, provides transaction screening capabilities with AML/KYT compliance features through integrations with providers like CipherOwl and Elliptic, helping institutions meet disclosure and monitoring requirements while maintaining operational efficiency.
The new framework also affects how institutional clients evaluate crypto service providers. With disclosure requirements standardized, institutions can more effectively assess the risk profiles of different tokens and protocols. This shift from regulatory ambiguity to transparency-based oversight may accelerate institutional adoption by reducing legal and compliance risks.
Looking Ahead
This transformation in U.S. crypto regulatory framework marks the industry's entry into a new phase. From "whether regulation should intervene" to "how to regulate effectively," from "making judgments for investors" to "letting investors make informed decisions after full disclosure," these philosophical shifts will profoundly influence the crypto industry's future direction.
The success of this approach will depend on implementation details and market response. If disclosure requirements prove too burdensome, they could stifle innovation. If too lenient, they may fail to protect investors adequately. Finding the right balance will be critical as the SEC moves from proposal to final rules.
What's clear is that the United States is attempting to create a regulatory framework that learns from both historical securities regulation and the unique characteristics of crypto assets. Whether this approach becomes a global model or requires further iteration remains to be seen, but it represents a significant step toward regulatory maturity in the digital asset space.
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