Crypto Regulation Shifts to SEC as $75M Token Raise Rule Advances

A bill stalls, and an agency moves in

For most of the past two years, the crypto industry treated the Clarity Act as the event that would settle its biggest question: which federal regulator oversees which tokens. That plan broke down on September 15, when a Senate cloture vote failed 49-50. Supporters ended up 11 votes short of the 60 they needed to open floor debate.2928 The bill had already passed the House 294-134 in July 2025 and cleared the Senate Banking Committee 15-9 in May 2026. No market-structure bill had come closer to becoming law.29

The Securities and Exchange Commission did not wait. Chair Paul Atkins pledged the next day that the agency would act whether or not Congress did.29 On September 17, two days after the vote, the Commission issued an order letting qualifying venues trade certain tokenized stocks on-chain.234 The SEC's message was that agency rulemaking, not legislation, is now the main path forward.

For anyone following capital raises, this is less about the order of events in Washington and more about one question. Can startups and investors put money to work in U.S. crypto ventures without a statute behind them? Our reading is that, for now, they mostly can. The rules they would be relying on, though, could be reversed far more easily than a law.

The fundraising rule that copies the bill

The most important SEC action for founders came before the Senate vote. On August 18, the Commission proposed Regulation Crypto Assets, its first formal crypto rule proposal.24 Atkins framed it as an effort to restore American leadership in capital formation. It includes a "startup exemption" for raises up to $5 million over four years and a "fundraising exemption" for up to $75 million a year.1 Law firm analyses add detail: the fundraising exemption has two tiers, with a $20 million cap for Tier 1 and $75 million for Tier 2 in any 12-month period.26 Larger raises would require audited financial statements once they pass certain thresholds.1

The structure closely tracks the stalled bill. Herbert Smith Freehills Kramer concluded that the proposal treats crypto assets almost exactly as the Clarity Act would have under securities law.24 Troutman Pepper Locke found that it achieves most of the bill's practical fundraising goals.26 One explainer noted that the bill's own $75 million, 12-month offering exemption is the model the SEC later used for its rule.29

The proposal also lets tokens stop being securities over time. Under the SEC's approach, the investment contract around a token ends once the network becomes self-operating. After that, the token can trade free of securities law.24 Issuers would also be exempt from state securities registration, so they would not need approval in each state separately.24 That kind of single federal path is something founders have long asked for.

All of this rests on an earlier step. A joint SEC-CFTC interpretive release in March 2026 set up a token taxonomy, and only one of its categories, digital securities, stays fully under SEC jurisdiction.59 One founder-focused guide says the taxonomy has been in effect since March 23. The exemptions, by contrast, are still only proposed and cannot be relied on until a final rule takes effect.9

Where the coverage agrees, and where it splits

Nearly every account agrees on the basic facts: the Senate vote failed, the SEC moved fast, and agency action is now the main way crypto policy gets made.212327 The disagreements are over how durable the new rules are and how far they reach.

The legal commentary is the most cautious. Troutman stresses that an exemption the SEC creates on its own is weaker than one Congress writes into law. It points to the Fifth Circuit striking down several Biden-era SEC rules for exceeding the agency's authority.26 It also notes what agency action cannot do at all: give crypto customers priority in bankruptcy, or classify crypto platforms as financial institutions under the Bank Secrecy Act.26 A Forbes analysis argues that any crypto rule finalized without explicit statutory authority invites a lawsuit. It calls the outcome a return to regulation by enforcement.21 The founder guide flags possible legal challenges to the proposal itself, citing recent court rulings that curb agency power.9

Industry-friendly outlets are more relaxed. One concluded that "the CLARITY Act was optional," and counted at least nine regulatory moves by the SEC and CFTC since the vote.30 It also quoted Coinbase CEO Brian Armstrong saying the industry would get regulatory clarity whether the bill passed or not.30

On Capitol Hill, House Financial Services Chair French Hill says the agencies' rules fall short of the lasting changes the bill would bring. He still hopes Congress will pass it in the lame-duck session before the new Congress takes over in 2027.22 Prediction markets are less hopeful: one put the odds of the bill becoming law in 2026 at 6.2%.28 BitGo CEO Mike Belshe has gone further. He warns that without a statute, platforms that combine exchange, brokerage and custody concentrate risk, and he compared it to Lehman Brothers.25

Our view: the optimists are right about the near term and the skeptics are right about the long term. The capital-raising rules can work in practice right away. They can also be undone by a future SEC, struck down in court, or replaced by a new Congress. One explainer notes that a Democratic House in 2027 would probably start drafting from scratch.29

The tokenized-stock exemption, and the reporting that got it wrong

The September 17 order deserves its own note, because earlier coverage misdescribed it. Before its release, several outlets described the "Innovation Exemption" as a 12-to-36-month sandbox for issuing and trading tokens.35 The actual order is different. It gives tokenized securities venues a five-year conditional exemption from registering as exchanges, running through September 17, 2031. It also exempts qualifying liquidity providers from being treated as dealers.64

The order is also narrower than the name suggests. Synthetic tokens that only track a stock's price are excluded. Holders must get the same dividend and voting rights as traditional shareholders.4 The venues cannot conduct primary issuance, so any offer or sale of a tokenized stock still needs to be registered or exempt on its own terms.6 Sidley notes that symbol and volume caps apply, and that a venue that breaches a symbol cap loses the exemption.6 Atkins himself called the order a bridge that "must be followed by durable rulemaking."4 In other words, it is a trading pilot, not a fundraising channel. Founders should not confuse it with Regulation Crypto Assets, which one guide stresses comes from a different SEC division and covers how tokens are sold, not where they trade.9

The funding backdrop: AI dominates, crypto concentrates

These rules arrive in a venture market where AI takes most of the money. Crunchbase data shows global venture funding of $159 billion in Q3 2026. AI startups took $102 billion of that, about 64%, and a record 27 companies raised rounds of $1 billion or more.1420 Funding through the first three quarters reached $679 billion, the highest on record for that period.14 A Law360 analysis puts the gap starkly: Databricks raised $5 billion in a single August round, while crypto projects together disclosed $1.58 billion that month.15

Crypto venture funding is recovering, but mainly for later-stage companies. Galaxy Research counted $5.68 billion across 384 deals in Q2, up 31% from the previous quarter. Later-stage companies took about 78% of that capital.11 U.S. companies captured 73.5% of the money. Only five new crypto-focused funds raised capital in the quarter, the fewest since 2019.11

Recent weekly deal tallies show how blurred the line between AI and crypto has become. In one week, October 3 to 9, crypto and Web3 announcements totaled $380.51 million. Leading the list were Spiko's $90 million round for tokenized cash funds and Nous Research's $90 million at a reported $1.5 billion valuation, backed by Nvidia and Microsoft's M12.13 Sequoia led a $30 million seed round for Catalyst, which builds AI trading agents. Coinbase and Jump Trading also invested.16 Umia raised about $6 million by auctioning its own token.18

Why the rules matter for capital

This is where the regulatory story and the funding story meet. A shortage of capital is not crypto's problem. Its problem is that early-stage money has trouble competing with AI, and new crypto funds are barely forming.1115 A $5 million startup exemption and a $75 million annual raise limit, both with state preemption, go straight at that gap. They give smaller projects a cheaper way to raise money than standard private-placement routes.924

The uncertainty is about time. Investors pricing a token raise under an SEC exemption are also pricing the chance that the rule is overturned in court or reversed by a future administration. Market commentary already points to a policy discount on assets that had traded on expectations of imminent clarity.29 Until Congress passes a law, U.S. crypto capital formation will run on rules that are workable but temporary, while AI keeps taking most of the money.