SEC Submits “Crypto Safe Harbor” Proposal for White House Review! Chairman Paul Atkins: Roll Out Soon (in the Short Term)

SEC Chair Paul Atkins has confirmed that a proposal for a “Safe Harbor” framework—one that has been highly anticipated by the cryptocurrency industry and would allow projects to be exempt from registration in the early stages—has now been submitted for review by the White House. On Monday, Paul Atkins revealed at a digital assets summit jointly hosted by Vanderbilt University and the Blockchain Association that the proposal, which first surfaced last month, has entered the final review stage within the White House administrative process. The final gatekeeping and review are being conducted by the Office of Information and Regulatory Affairs (OIRA) under the Office of Management and Budget (OMB).

We will bring forward crypto regulatory rules very soon. The proposal is currently in the OIRA review stage, and this is indeed an exciting final step before formal issuance.

Among the Safe Harbor proposal put forward by Paul Atkins, the most closely watched provision is the “Startup Exemption,” which is intended to allow cryptocurrency startups to raise operating capital smoothly while still taking investor protection into account. According to the proposal, this exemption would allow cryptocurrency projects to launch without immediately registering, and to raise a certain amount of funds within 4 years, provided they must disclose the necessary information. In addition, Paul Atkins also put forward the concept of an “Investment Contract Safe Harbor,” which would complement the Token Taxonomy guidance that the SEC issued this March. For the cryptocurrency industry, the Token Taxonomy guidance is undoubtedly a historic milestone—this is the first time the SEC has clearly defined in an official document under what circumstances and under what conditions digital assets would be considered “securities.” Regulation and Obstacles: Legislative and Administrative Rules Moving in Parallel At the same time that the SEC is actively pushing forward its regulatory framework, the U.S. Congress is also working to regulate the cryptocurrency industry through legislation. However, over the past year, the legislative process has been anything but smooth, repeatedly running into obstacles. Paul Atkins said legislation is necessary because regulatory agencies like the SEC “need a clear and unmovable (Chiseled in Stone) legal basis.” He explained that, compared with administrative rules that could change at any time due to shifts in political parties or a new president taking office, bills passed by Congress through three readings have real staying power. He said:

We can certainly do a lot on the regulatory front, but in the end we must ensure these rules truly take root and are not easily overturned.

“Innovation Exemption” Sparks Power Struggles Between Wall Street and Crypto Circles On the other hand, the SEC is also working on an “Innovation Exemption” mechanism. The idea is similar to creating a “regulatory sandbox” for on-chain assets—allowing firms to test innovative financial products and services in a controlled environment. However, this exemption concept has sparked intense debate over the past year between crypto advocates and traditional financial institutions. Traditional Wall Street forces worry that an overly lenient scope of exemption could weaken investor protection mechanisms and market oversight. Citadel Securities, the giant market-maker, has strongly urged that the SEC should make rules by following the formal “Notice-and-comment” administrative process. In contrast, the Blockchain Association pushed back on Monday, arguing that cumbersome procedures are not absolutely necessary; the SEC has also adopted exemption mechanisms multiple times in the past, and it absolutely has the authority to exercise that mechanism under the law. In response, Paul Atkins backed the crypto position at the summit and clearly stated that the SEC does in fact have the authority to drive an exemption mechanism. He said: