The U.S. Securities and Exchange Commission (SEC) has formally submitted its pivotal proposal to reclassify most crypto assets to the White House’s Office of Management and Budget (OMB) for review, a key step that could reshape federal oversight of digital tokens.
According to records on the U.S. General Services Administration’s Regulations.gov portal, the SEC forwarded two proposed rules to the OMB on Friday. One is the highly anticipated interpretative notice from last week outlining which digital assets the agency would consider securities under federal law. As of Monday, the OMB listed the proposal’s status as “pending review,” indicating the White House is now evaluating the regulatory plan’s potential economic and policy impacts.
Source: Regulations.gov
SEC’s Proposed “Token Taxonomy” and Its Four Exclusions
In its notice, SEC Chair Paul Atkins stated the agency would not treat four categories of digital assets as securities: digital commodities (like Bitcoin), digital tools (utility tokens for platform functionality), digital collectibles (including non-fungible tokens), and stablecoins. The framework aims to create a “coherent token taxonomy” and clarify when a “non-security crypto asset” might still qualify as an investment contract under the Howey Test, the legal standard for determining securities.
If finalized, this interpretation would serve as an interim regulatory bridge. It would provide immediate clarity to market participants while Congress works on comprehensive market structure legislation, such as the bipartisan CLARITY Act. The SEC’s move follows a March memorandum of understanding with the Commodity Futures Trading Commission (CFTC), signaling a coordinated approach where the CFTC would likely oversee the newly defined non-securities.
OMB Review: What’s at Stake?
The OMB’s review is a standard but critical phase for major federal regulatory proposals. The office assesses a rule’s consistency with administration priorities, its estimated costs and benefits, and its potential impact on the economy. The outcome of this review could accelerate, delay, or alter the SEC’s final interpretation. For the crypto industry, the review period represents a window where the White House can weigh in on the scope of the SEC’s enforcement discretion over digital assets.
Congressional Action on Market Structure Remains Stalled
While the SEC pursues its interpretative rule, legislative progress on a permanent solution has hit snags. Politico reported on Friday that White House and congressional negotiators reached an “agreement in principle” on a key issue—stablecoin yield—which could unblock the CLARITY Act in the Senate Banking Committee.
However, the committee indefinitely postponed its scheduled markup of the bill in January after Coinbase CEO Brian Armstrong publicly opposed provisions he argued would stifle innovation. As of Monday, no new markup date has been announced. Senate Majority Leader John Thune indicated in March that the chamber would first prioritize the SAVE America Act, a voter registration bill, before taking up bipartisan legislation like CLARITY.
Balancing Innovation and Investor Protection
The debate highlights the ongoing tension between establishing clear rules and maintaining regulatory flexibility. Proponents of the CLARITY Act argue that statutory definitions are necessary to end regulatory uncertainty and prevent enforcement overreach. Critics, including some crypto firms, worry certain provisions could impose unnecessary burdens. The SEC’s pending interpretative rule, if upheld, may define the playing field in the interim, but only Congress can create a permanent, unified regulatory regime for crypto asset markets.
Related: CFTC staff clarify expectations on using crypto as collateral
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