Written by: Aaron Krowne, Esq.
The United States Securities and Exchange Commission (SEC) and its staff have been extremely-active during the summer of 2025 (see our articles on many of their Spring moves here), issuing new guidance and signaling a shift toward more acceptance, engagement and clarity for digital asset markets.
At the same time, Congress advanced the Digital Asset Market Clarity Act of 2025 (the “Clarity Act”), which passed the House on July 17 with bipartisan support. Together, these developments mark a turning point in how U.S. regulators are approaching the treatment of blockchain, crypto, and digital assets.
This article summarizes the SEC’s recent moves, explains the major elements of the Clarity Act, and outlines what these developments mean for market participants and how they represent a veritable sea change.
The SEC’s Total About-Face Picks up Steam
SEC Launches Project Crypto and Spring 2025 Agenda
The SEC’s Spring 2025 Unified Agenda marked a turning point in digital asset policy, proposing roughly twenty crypto-related rulemakings. Among these are initiatives to clarify when digital assets are securities, introduce tailored safe harbors, and create a more accessible framework for token trading on regulated exchanges and ATS platforms. SEC Chair Paul Atkins packaged these moves under the banner of “Project Crypto,” a strategic initiative aimed at modernizing the treatment of blockchain assets across U.S. markets. The project envisions a regulatory future in which U.S. financial markets can operate partly on-chain, leveraging blockchain for settlement, disclosure, and investor protection. These reforms represent an effort to build durable compliance lanes, replacing the patchwork of enforcement-driven policy that has long frustrated market participants. We detail some highlights below:
Trading & Markets FAQs (May 15)
On May 15, the SEC’s Division of Trading and Markets released FAQs addressing custody, net capital, SIPA coverage, transfer-agent obligations, and operations for exchange-traded products (ETPs) involving digital assets.
The FAQs clarified that:
- Broker-dealers can satisfy customer protection rules (Rule 15c3-3) even if digital asset securities are not certificated.
- SIPA coverage does not extend to non-security crypto or unregistered investment contracts.
- Bitcoin and ether may be treated as “readily marketable” commodities for net capital purposes.
- Transfer agents can use distributed ledgers for recordkeeping, provided Exchange Act requirements are met.
At the same time, the SEC withdrew its restrictive 2019 joint statement, which had limited broker-dealer custody of digital asset securities (which had required, essentially, opening up a totally separate broker-dealer just for “touching” digital asset securities). This effectively opened space for compliant custody and in-kind ETP operations.
Corporation Finance Staking Statement (May 29)
On May 29, the Division of Corporation Finance stated that “Protocol Staking Activities” on proof-of-stake networks, when limited to protocol-level validation where asset owners retain control, do not involve an offer or sale of securities.
The statement excluded liquid staking and restaking and emphasized that discretionary yield products are outside its scope. Two Commissioners publicly disagreed, underscoring that litigation risk remains. Still, the statement gives operators and validators a practical lane for staking that is unlikely to trigger securities treatment.
SEC Crypto Task Force and Roundtables
The SEC’s newly-formed Crypto Task Force, chaired by Commissioner Hester Peirce, has initiated public roundtables on tokenization, DeFi, and related issues. While these do not change the law directly, they frame policy direction and have been linked to recent staff statements.
Liquid Staking Statement (August 5)
In an August 5th guidance release, the SEC followed up to its earlier staking exemptive guidance releases by also excluding liquid staking. The SEC explained that it viewed as “merely ministerial” basic tasks provided by liquid staking providers, and therefore, these failed to meet one of the key the thresholds underlying the Howey test (e.g. “… the Liquid Staking Provider’s taking custody of the deposited Covered Crypto Assets and in some cases selecting a Node Operator is not sufficient to satisfy Howey’s “efforts of others” requirement because these activities are administrative or ministerial in nature and do not involve managerial or entrepreneurial efforts.”).
Exchange Proposals for Generic Listing Standards
In July and August, major exchanges including Cboe BZX, Nasdaq, and NYSE Arca filed proposed rule changes seeking to adopt “generic listing standards” for crypto-backed Commodity-Based Trust Shares. If approved, qualifying products could list without case-by-case SEC approval.
This would streamline the process for sponsors seeking to launch new crypto-based ETPs, including multi-asset products.
SEC Clarifies Liquid Staking Is Not a Securities Offering
On August 5, 2025, the SEC’s Division of Corporation Finance issued a much-anticipated statement on liquid staking. The Commission determined that when providers engage only in administrative or ministerial tasks, such as holding assets in custody or delegating to node operators, these activities do not satisfy the “efforts of others” prong of the Howey test.
This means that liquid staking, in its basic form, does not constitute the offer or sale of securities. The move provides long-awaited clarity for a rapidly growing segment of the crypto economy, giving staking protocols and intermediaries a defined regulatory lane. Importantly, the SEC emphasized that this guidance does not extend to discretionary yield products or restaking services, which remain outside the exemption and still carry enforcement risk.
SEC Approves In-Kind Operations for Crypto ETPs
In a significant development for crypto-backed exchange-traded products, the SEC authorized in-kind creations and redemptions in mid-2025.
This change brings crypto ETPs closer to the operational model long used in commodity funds, enabling more efficient transactions and reducing costs for issuers and investors. By allowing in-kind operations, the SEC has removed one of the largest frictions facing digital asset ETPs, signaling a willingness to align crypto products with mainstream financial market practices.
This approval also lays the groundwork for more complex products, including multi-asset funds and those linked to staking activity, to gain traction in U.S. markets.
Legislative Context: The GENIUS Act and the Clarity Act
Congress has been active alongside the SEC’s policy shift. The GENIUS Act, signed into law on July 18, 2025, established a federal framework for stablecoins, requiring one-to-one reserves, monthly audits, and oversight by both federal and state regulators.
This Act works in tandem with the Digital Asset Market Clarity Act, which passed the House days earlier, to form a legislative foundation for digital assets. While the Clarity Act focuses on classifying tokens and streamlining exchange registration, the GENIUS Act ensures that stablecoins operate under strict transparency and safety requirements.
Together, these measures reflect a coordinated legislative push to bring crypto assets within a structured, federally supervised regime, complementing the SEC’s summer guidance and rulemaking agenda.
What Would the Clarity Act Do?
The House-passed Clarity Act–while not yet finalized, and not yet law–represents the most comprehensive and mature attempt at U.S. digital asset legislation to date. Its major elements (as currently-written) include:
- Asset Classification
The Act introduces categories for “digital asset,” “digital commodity,” “investment contract assets” (versus “investment contracts”) and “mature blockchain system.” Tokens that reach maturity through decentralization and the absence of “material ongoing efforts” from a promoter can be certified as digital commodities.
- Market Structure
The Act establishes expedited registration for digital commodity exchanges, brokers, and dealers. It recognizes qualified digital asset custodians and provides federal preemption for registered exchanges, limiting conflicting state laws.
- Primary and Secondary Sales
It creates exemptions for primary digital commodity offerings with tailored disclosure obligations. Related persons face volume and holding-period limits during the transition to maturity. After maturity certification, secondary trading occurs under CFTC oversight, though the SEC retains anti-fraud jurisdiction.
- Developers, DeFi, and SIPA
The Act provides protections for non-controlling developers, includes specific provisions for decentralized finance, and amends SIPA to reflect the treatment of investment contract assets. It also addresses stablecoins in coordination with other pending legislation.
- Federal Preemption
The Act explicitly provides that digital commodity brokers and exchanges, to the extent they are operating within the prescribed regulatory zones of the Act, are exempt from state laws. This means that entities like cryptocurrency centralized exchanges will no longer have to obtain duplicative state licenses for their foundational activities, such as, e.g., money transmitter licenses).
Legislative Status
The Clarity Act passed the House on July 17, 2025. The Administration issued a supportive statement. The Senate Banking Committee is reviewing a competing draft, with committee action expected in the fall.
How Do SEC Guidance and the Clarity Act Interact?
- Broker-Dealer Operations: The May FAQs opened the door for much more straightforward custody of digital asset securities. The Clarity Act would narrow the universe of securities by designating many tokens as commodities, once mature, reducing custody and capital complexity, as well as uncertainty about whether the digital assets being held are in the proper legal category in the first place.
- Staking: The SEC staff statement excluded basic protocol staking from securities laws. The CLARITY Act would strengthen this by shifting mature tokens into a commodity framework.
- ETPs: The exchange filings for generic listing standards could be eased by the Act’s clearer asset classifications, especially for multi-asset products.
- Compliance Programs: Market participants should begin preparing for the various registration and exemption categories relevant to them, and the disclosure standards contemplated in the bill.
Takeaways
- Since early May, 2025, the SEC has taken major additional steps to provide clarity on custody, capital, and staking, building on already-strong momentum from the Spring.
- The Clarity Act would codify a new U.S. token taxonomy, migrate mature tokens into a commodity regime, and create a dual regulatory structure with much cleaner lines than exists today (where overlapping and inappropriate digital asset regulatory claims is one of the main concerns to the industry).
- Together, these moves start to create an undeniable policy pivot toward a framework that defines lanes for compliance rather than a regime relying solely on enforcement.
- Legal and compliance teams should prepare for staggered implementation, continuing SEC oversight on securities offerings, and eventual CFTC oversight of digital commodities–including crypto exchanges.
Final Thoughts
The SEC’s recent guidance releases and outreach actions and the Clarity Act both establish that, at long last, the U.S. is getting an affirmative, clear, and thoughtfully-structured digital assets regulatory framework. While not all uncertainties are resolved, especially around yield products and the regulatory contours of the Clarity Act (such as how the SEC would make digital commodity maturity determinations), the combination of staff guidance and draft legislation provides a roadmap. Market participants who align early with these contours will be better positioned as the legal framework solidifies.
Related Moves We’re Tracking:
Exchanges File Proposals for Generic Listing Standards
During the summer, leading exchanges including Nasdaq, NYSE Arca, and Cboe BZX filed proposals to establish generic listing standards for crypto and commodity-backed exchange-traded products.
If approved, these standards would allow new crypto funds to be listed without undergoing case-by-case SEC approval, cutting the average timeline from nearly eight months to as little as two to three.
The change could significantly expand the market for crypto ETFs by enabling quicker launches of funds tied to altcoins like Solana, XRP, or Dogecoin. Nasdaq has gone a step further, filing to allow tokenized securities to trade directly on its platform, a first-of-its-kind proposal that would integrate digital instruments into established securities market infrastructure.
