The Securities and Exchange Commission's crypto rulemaking proposal has entered White House review, a procedural step that signals the agency is preparing to release formal language on digital-asset regulation. The proposal is expected to address DeFi safe harbors and broader rulemaking for digital assets. For an industry that has spent years fighting the SEC in court, the move toward formal rulemaking is a notable shift.
White House review begins
The White House Office of Management and Budget is now reviewing the SEC's proposal. This stage typically precedes publication of a proposed rule in the Federal Register, which would trigger a public comment period. The review process can take weeks or months. Once completed, the SEC can publish the proposed rule, starting a formal comment period that could last months. The move comes after years of criticism from the crypto industry, which has accused the SEC of regulating through enforcement rather than rulemaking.
Industry criticism of enforcement-first approach
Crypto firms and trade groups have long argued that the SEC's reliance on enforcement actions — rather than clear rules — has stifled innovation and left companies guessing what's legal. A formal rule would allow stakeholders to comment, challenge, and prepare. But the industry is not united on what clarity looks like. Varying definitions of what a digital asset security is could complicate the rulemaking. The rulemaking process could shift the debate from enforcement cases to actual proposed language, giving the industry a concrete target to respond to.
DeFi safe harbors: a tough design problem
The proposal is expected to include safe harbors for decentralized finance platforms. Designing those is difficult. Decentralized systems don't have a single operator to register or supervise, making traditional regulatory frameworks hard to apply. The SEC could propose strict requirements, broad intermediary definitions, and heavy burdens on platforms — which might render the safe harbor unworkable in practice. The industry wants clarity, but the complexity of DeFi means any safe harbor will have to balance innovation with investor protection. The SEC's proposal will need to define what qualifies for a safe harbor and under what conditions. That definition could determine whether the rule helps or hurts the DeFi sector.
What's at stake
The biggest risk, according to observers, is that the framework looks like clarity but is unworkable in practice. If the SEC proposes rules that are too strict or vague, the industry could end up in the same position — fighting in court, but now over rule language rather than enforcement actions. The comment period will be a key test of whether the proposal can bridge the gap between the regulator and the regulated. If finalized, the rule would mark the first comprehensive federal framework for crypto assets, a milestone the industry has sought for years. But the path from proposal to final rule is long, and the outcome is far from certain.
The White House review does not guarantee a final rule. But it does suggest the SEC is moving toward a more public phase of its crypto policy. The next concrete step: publication of the proposed rule, likely within weeks, followed by a comment period that could last months. The industry will be watching closely.
