New SEC Crypto Proposal Could Finally Fix Tokens

The SEC released a 402-page crypto proposal that includes two exemptions for token offerings: a startup exemption allowing one-time fundraising up to 5 million dollars and a larger exemption allowing up to 75 million dollars. The 75 million dollar threshold exceeded market expectations. The SEC and CFTC each voted three to zero in favor of the proposal, a 60-day public comment period has begun, and a full ruling is unlikely before sometime in 2027.

Rob described the proposal as the first fit-for-purpose federal offering framework ever created for crypto tokens. Prior enforcement through hodgepodge rules forced companies into offshore nonprofit foundation structures separated from labs entities, creating economic misalignment and bad incentives. The proposal would allow companies to collapse labs and foundation entities into a single US Delaware-domiciled company and issue a token on top of it, with companies self-certifying decentralization rather than fitting rigid external structures. The proposal also includes federal preemption over states, preventing states from independently overriding federal crypto rules.

Santi argued the proposal is a nothing burger because it is an agency ruling rather than legislation and can be reversed by a future administration quickly. Rob countered that widespread adoption by large companies would make the framework practically irreversible within the economy even without legislative enshrinement. Santi also noted the biggest market criticism of tokens is the inability to tie cash flows to them, and the proposal does not clearly solve that problem, though Rob said the proposal is ambiguous on that point. The SEC appears comfortable with network demand tokens but left the cash flow question unresolved. Buyback and burn is considered acceptable under the framework, and a regulated Delaware entity structure could allow collapsing token economics with corporate structure for better aligned incentives.

Projects must either accept disclosures and ongoing reporting through an exemption or complete decentralization to reach the safe harbor. Projects publicly certifying no managerial efforts are attached to their token face serious risk if they later breach that certification. One speaker argued there will be a clear losing cohort of projects that were operating in the gray zone, as they must now either meet disclosure requirements or finish decentralizing. Projects that cannot do basic disclosures, financial reporting, or quarterly updates are ones where investors probably should not be buying the token in the first place. Unlike the previous regulatory environment, the current SEC is not trying to catch projects out, reducing the risk of being first to act under the new rules. Uniswap is identified as a strong stress test for the framework given its deliberate decentralization, its win against the SEC in litigation, and its active presence in Washington.

Polymarket odds on the Clarity Act passing stood at roughly 18 to 20 percent at the time of recording. People close to the government describe passage as a coin flip, while those watching day-to-day positioning believe chances are pretty low. A Senate vote is expected in September. The market has largely positioned as if the Clarity Act will not pass, meaning any upside surprise would be a positive catalyst. Reasons, Coinbase, Ripple, and DeFi Alliance are among the organizations most heavily involved in lobbying efforts.

Stan Druckenmiller filed a 13F disclosing a roughly 23 million dollar position in PER, Hyperliquid's associated fund vehicle, though the filing reflects holdings as of June 30 and he could have exited or been short by the time of recording. Other disclosed shareholders include Rob Citrone, David Greenspan, D1 Capital's Daniel Sunheim, and Citadel. PER has been trading under NAV. Hyperliquid is considered best-in-class technology and is currently serving a need no centralized exchange is serving, but the on-chain derivatives market is expected to become far more competitive over the next 18 months as centralized exchanges begin serving the same needs. Jeff Yan of Hyperliquid, a founder in one speaker's portfolio, moved out of the United States specifically because of regulatory uncertainty around tokens, offered as a concrete example of the human cost of the prior regulatory environment.

Trading flows in crypto have broadly declined significantly, as evidenced by public disclosures from Robinhood, Coinbase, and DeFi protocol data. DeFi's rising share of total volume reflects a falling denominator rather than DeFi itself growing. Calshi filed to offer an S&P 500 perp, and regulators are working to determine whether perps should be classified as swaps or futures. Offering a perpetual on a listed single-name equity is currently illegal and represents a more regulatory murky situation than a Bitcoin or Ethereum perp, which can probably be self-certified today under current rules. Growth in stablecoin usage is concentrated in B2B transfers and on-chain new bank transaction volume rather than retail accumulation, and stablecoin holder counts are not growing because users are shifting activity into other DeFi products.