SEC Crypto Proposal: Peirce Calls It a Break From Inapt Rules
The SEC published a formal regulatory proposal for digital assets in August 2026, and Commissioner Hester Peirce wasted no time signalling her support. She described the initiative as an important step away from a body of rules she has long characterised as badly suited to crypto, and toward a framework that is clear, sensible, and actually enforceable. For accounting firms, auditors, and CFOs who have been navigating digital asset accounting in a near-vacuum of securities-law certainty, the proposal matters well beyond its political context.
What the SEC Actually Proposed
The agency's August 2026 notice sets out rules designed to create what it calls a "clear and fit-for-purpose framework" for certain investment contracts that involve crypto assets. The stated objective is to allow entities to raise capital through digital asset offerings while maintaining investor protections that the SEC regards as non-negotiable.
The shift in tone at the top
Chairman Paul Atkins, in a separate statement accompanying the proposal, acknowledged that the agency's previous enforcement-heavy posture had pushed investment activity offshore and reduced the quality of investor protections available to US participants. That is a notable concession from a sitting SEC chair, and it suggests the proposal is not a procedural exercise. Atkins had signalled as early as late July 2026, in public remarks to CNBC, that the agency was prepared to act unilaterally on digital asset rules if the Senate did not move the CLARITY Act forward.
Why the timing is significant
The proposal arrived within days of the US Senate declining to advance the Digital Asset Market Clarity Act, the legislation that would have established a comprehensive, cross-agency framework for crypto regulation in the United States. With the CLARITY Act's prospects now assessed at around 10% for 2026, given unresolved political disputes and a Senate recess that leaves only a narrow window when Congress reconvenes on 14 September, the SEC has effectively decided not to wait. The agency is moving on its own authority to fill at least part of the gap.
Peirce's Position and What It Signals
Hester Peirce, often referred to informally as "Crypto Mom" for her consistently pro-clarity stance within the Commission, framed the proposal as a generational correction. Her published statement noted that the industry had spent years struggling with the SEC's insistence on applying rules designed for traditional securities to a fundamentally different asset class. Her endorsement is relevant not just as commentary but as an indicator of internal Commission alignment: when both the chair and a historically outspoken commissioner are publicly supportive, the proposal carries real institutional momentum.
What "inapt rules" means in practice
Peirce's use of the word "inapt" is pointed. It refers to the longstanding application of the Howey test and existing securities registration requirements to crypto tokens in ways that many market participants argued produced absurd compliance obligations, required disclosures that bore no relation to on-chain reality, and effectively criminalised standard token distribution mechanics. The proposal, at least in its stated aims, is designed to replace that improvised approach with purpose-built rules.
Accounting and Financial Reporting Implications
For practitioners working on crypto financial statements under US GAAP or advising clients who hold digital assets, the SEC's proposal has downstream consequences that go beyond securities law.
Classification depends on regulatory status
Under ASC 350-60, the FASB's crypto asset accounting standard that brought fair value measurement to Bitcoin and similar fungible digital assets, the scope is deliberately narrow: it covers crypto assets that meet a specific definition, including the requirement that the asset not be issued by the reporting entity or a related party. Whether a given token qualifies under ASC 350-60, or instead falls under other intangible asset or financial instrument guidance, depends partly on how it is characterised under applicable law. A clearer SEC framework for what constitutes an investment contract involving a crypto asset directly informs that classification question.
Disclosure obligations could expand
If the SEC's final rules require issuers of certain crypto investment contracts to make specific disclosures, entities that hold those instruments may face corresponding disclosure obligations in their own financial statements. Auditors will need to assess whether holdings that were previously treated as indefinite-lived intangibles require reclassification, whether fair value measurements remain appropriate, and whether new contingent liability disclosures are triggered by the regulatory status of the underlying asset.
The IFRS dimension
Firms reporting under IFRS rather than US GAAP face a parallel, though distinct, set of questions. The IASB has not yet issued a dedicated standard for crypto assets, and the current approach under IAS 38 (intangible assets) or, in some cases, IAS 2 (inventories) will continue until the Board acts. However, the SEC's definitional work on what constitutes a crypto investment contract could influence how IFRS preparers assess the substance of their holdings, particularly where those holdings are tokens that might now be characterised as securities in the US. Firms with cross-border reporting obligations need to track both tracks simultaneously. For a broader view of how IFRS crypto assets interact with emerging regulatory definitions, our coverage of the US tax and stablecoin accounting updates from the August 2026 legislative round provides useful parallel context.
Audit risk assessment
From an audit perspective, regulatory uncertainty has historically been treated as a significant source of inherent risk when auditing digital asset balances. A credible, formally proposed SEC framework, even before it is finalised, reduces some of that uncertainty. Auditors can begin to reason about the likely regulatory treatment of specific instruments and adjust their risk assessments accordingly. That said, a proposed rule is not a final rule, and audit committees should be cautious about treating the proposal as settled law before the comment period closes and any final rule is published.
What the CLARITY Act's Stalling Means for Firms
The CLARITY Act would have provided a comprehensive statutory framework, including a clearer allocation of jurisdiction between the SEC and the CFTC. Without it, the SEC's proposal operates within the agency's existing statutory authority, which means it will face legal challenge from those who argue the agency is overstepping. For accounting firms and CFOs, this creates a two-track monitoring obligation: track the SEC's rulemaking process, including the comment period and any final rule, and track the legislative calendar for any renewed effort to pass the CLARITY Act or successor legislation.
Planning under uncertainty
The Senate's return on 14 September 2026 and the narrow window before year-end means the legislative picture could shift quickly. Firms that hold digital assets, advise clients who do, or are considering entering the digital asset space should be building scenario plans now rather than waiting for a single definitive outcome. The two most likely scenarios by year-end are: a final or near-final SEC rule with no comprehensive statute, or a late-session legislative push that overtakes the SEC's proposal. Each scenario has different implications for how digital asset positions are classified, measured, and disclosed. For context on the legislative background, see our earlier piece on how the SEC proposed crypto rules as the CLARITY Act stalled in the Senate.
Practical Steps for Accounting Firms and CFOs
The proposal is open for public comment, and the comment period is the most direct channel for practitioners to influence the final shape of the rules. Accounting firms with crypto-sector clients, and CFOs whose entities hold or issue digital assets, should consider the following actions now.
Review your asset inventory against the proposed definitions
Map each digital asset on the balance sheet or in client portfolios against the SEC's proposed definitions of a crypto investment contract. Identify which assets are likely to fall within the new framework, which are likely to remain outside it, and which are genuinely ambiguous. That mapping exercise informs both current-period disclosure decisions and planning for any reclassification that a final rule might require.
Assess comment period participation
The SEC's comment process is a formal opportunity to place your professional concerns on the record. Firms that have encountered specific accounting or audit complications arising from the current regulatory vacuum, such as difficulties determining fair value for tokens whose legal status is contested, or challenges with management's going-concern assessments for issuers operating in regulatory grey areas, should document those experiences and consider submitting comments directly or through a professional body.
Update engagement letters and client communications
Where engagement letters or client advisory agreements reference the regulatory status of digital assets, the proposal is a trigger for review. Clients should be informed that the SEC has published a formal proposal, that it is not yet final, and that the accounting and disclosure treatment of their holdings may be affected by the outcome.
Frequently Asked Questions
Does the SEC's proposal change how we account for Bitcoin or Ether under ASC 350-60 right now?
No. ASC 350-60 is a FASB standard, not an SEC rule, and the SEC's proposal does not amend it. Bitcoin and Ether that already meet the ASC 350-60 scope criteria continue to be measured at fair value with changes recognised in net income. The proposal may affect classification decisions for other tokens whose regulatory status has been unclear.
If a token is deemed a security under the new SEC rules, does it automatically fall outside ASC 350-60?
Potentially yes. ASC 350-60 excludes assets that are accounted for under other GAAP, including financial instruments guidance. If a token is classified as a security, it may need to be accounted for under ASC 320 (debt securities) or ASC 321 (equity securities) depending on its characteristics, rather than under the crypto asset standard. Legal and accounting counsel should be involved in that determination.
How should IFRS preparers respond to a US-only SEC proposal?
IFRS preparers are not directly bound by SEC rules unless they are also SEC registrants. However, the SEC's definitional work on crypto investment contracts is relevant for assessing the substance of holdings under IFRS 9 (financial instruments) or IAS 38 (intangible assets). Where a token held by an IFRS preparer is characterised as a security in the US, that characterisation is a fact worth considering in the IFRS substance analysis.
What happens to disclosure obligations if the SEC proposal is never finalised?
If the proposal lapses, the prior enforcement-based approach would likely persist until either new legislation or a revised rulemaking effort provides clarity. In that scenario, the existing SEC staff guidance and case-by-case enforcement actions remain the primary reference points for disclosure decisions. Firms should not assume that the proposal's publication alone has changed their obligations.
Should we wait for the final rule before updating our digital asset accounting policies?
No. The proposal is a strong signal of regulatory direction, and waiting for a final rule before beginning the analysis is a risk management error. Start the inventory and classification review now. If the final rule differs materially from the proposal, you will need to update your conclusions, but that is far less costly than entering the post-finalisation period unprepared.
Source: Cointelegraph