Foreign media: The United States Securities and Exchange Commission (SEC) Conference on Encryption Rules, originally scheduled for last week, was temporarily cancelled, and the Reg Cripto proposal and innovation exemption, which was intended to be discussed, was put on hold. CoinDesk stated that the reasons behind this were related to the fact that Congress was still advancing the Digital Assembly Market Clarity Act, and that regulators feared that acting alone would complicate legislative negotiations at this time.

Two encryption arrangements were originally discussed

Following the CoinDesk comb, the SEC originally planned to discuss the Reg Cripto proposal in a public meeting. This set of rules is intended to clarify how an enterprise can finance through tokens and in what circumstances it can no longer be subject to SEC regulation after the issuance of its own digital assets.

The source had also previously stated that the SEC had intended to publish at least some of the innovative exemptions on how the issuer of securities-type tokens dealt with its underlying securities. But neither arrangement eventually landed.

Clarity Act becomes the main constraint.

CoinDesk refers to sources who claim that the postponement of the meeting was directly related to Clarity Act. The White House and members of Congress are concerned that the ongoing consultations on the bill could be further disrupted by the introduction of regulatory action by the SEC before the first Senate vote.

Earlier this month, the market had expected that if Congress could not move the bill to a vote before the August recess, regulators might advance the rules. However, according to the article, this alternative path is now also under the pause key.

Time window closing

The article states that even if the process is restarted after the SEC, it will take a long time for formal rule-making, including public consultation, amendment of proposals, final rule, and a transitional period for implementation.

According to CoinDesk, the rule-making phase alone could be close to one year, followed by a further year. As a result, the final framework will be on the verge of assuming office in the next United States Government, at which point the regulatory arrangements completed may still be readjusted.

This also means that the market has previously relied on the judgement of regulators to “leave first” when parliamentary legislation stagnates, not necessarily in the short term. According to the article, the next move by the SEC may not be clear until the Senate is adjourned again in early October.