SEC's August 14 Vote Could Reshape How Crypto Startups Raise Capital

The SEC meets August 14. On the table is Regulation Crypto, a proposal that would let digital asset firms raise capital without full securities registration. The existing registration process is expensive and built for a world where tokens did not exist. Startups have routed around it for years – raising offshore or structuring around exemptions. If Regulation Crypto passes, some of that pressure lifts.

The proposal also allows tokens to shed their securities classification once their underlying networks reach a certain decentralization threshold. The exact threshold is unclear. The concept has circulated in crypto legal circles for years. SEC Chair Paul Atkins has separately floated an “innovation exemption” that could let tokenized stocks trade around the clock on blockchain platforms – 24/7 equity markets traditional exchanges cannot offer.

None of this is final. The SEC vote is one step; the full commission must approve the rule.

The legislative route is stuck. The Digital Asset Market Clarity Act passed the House but has not received a Senate floor vote. Senate Majority Leader John Thune filed a procedural motion to advance it. That motion needs 60 votes just to end debate. The Senate returns September 14, leaving a narrow window before midterm pressure. Probably not enough time to move a complex, contested bill, several lobbyists said.

The CLARITY Act would split crypto oversight: the SEC handles securities, the CFTC handles commodities. Bitcoin and ethereum would fall under CFTC jurisdiction as commodities. Everything else stays with the SEC. For exchanges and token issuers, that kind of clarity would be valuable. Right now, nobody knows which regulator is coming for them or under what theory.

The bill also includes ethics rules for public officials involved in crypto and protections for software developers. Those provisions are contentious and have slowed things down.

CFTC Chairman Michael Selig said his agency is ready to move on rulemaking regardless of whether the CLARITY Act passes. That means the CFTC is not waiting on Congress. Both agencies are already working together on Project Crypto, which sorts out which regulator has jurisdiction over which assets and platforms. It is a bureaucratic map-drawing exercise that matters for anyone operating in the space.

One fight getting less attention: crypto reward programs. Banks worry that yield-bearing crypto products could pull deposits from conventional savings accounts, according to the report. If someone can earn more holding a stablecoin or a tokenized deposit product than sitting in a checking account, some people will move money. Traditional institutions have been lobbying hard against these products, industry officials said. Fintechs want in, the report said. They see demand and are positioned to move fast.

That tension does not get resolved by either the SEC vote or the CLARITY Act directly. The regulatory environment shapes it. If Regulation Crypto passes and the overall framework loosens, fintech firms have more room to build these products. Banks know that.

For crypto startups, the August 14 vote is the more immediate event. A cheaper, cleaner domestic fundraising path would reduce the incentive to go offshore. It would not eliminate it – other jurisdictions still offer things the U.S. does not. The math shifts. Investors could also eventually benefit from trading stock-linked tokens outside standard market hours, if Atkins' innovation exemption idea gains traction.

The SEC has taken heat for years for being slow and enforcement-heavy on crypto. Regulation Crypto, if it moves forward, would be a real shift. Whether it actually passes the full commission vote on August 14, and in what form, is still an open question.

The CFTC and SEC are both moving. Congress is stuck. The industry is watching August 14.