SEC Ready to Issue Crypto Rules if CLARITY Act Fails: What Accounting Firms and CFOs Must Assess Now

SEC Chair Paul Atkins has told Congress that the agency is prepared to write its own digital asset rules if federal legislators cannot get the CLARITY Act across the finish line. For accounting firms advising crypto-exposed clients and CFOs managing digital asset positions, that statement changes the compliance planning calculus immediately. It means the question is no longer whether clearer US crypto regulation arrives, but which body delivers it, and on what timeline. The answer shapes everything from client classification obligations to the digital asset accounting software decisions firms will need to make in the months ahead.

What Chair Atkins Actually Said

Speaking publicly on 29 July 2026, Atkins confirmed that the SEC views providing a workable regulatory framework for digital assets as one of its core current priorities. His comments were directed squarely at the legislative process: if Congress delivers the CLARITY Act, the SEC will work within that statute. If the bill stalls or fails to pass in a form that resolves the key jurisdictional and classification questions, the SEC will not wait indefinitely. The agency has the existing statutory authority, and Atkins indicated the political will, to proceed through rulemaking.

This is a meaningful shift in posture. For much of the period between 2021 and early 2025, the SEC's primary instrument in crypto was enforcement, not rulemaking. Atkins is now signalling a preference for prospective rules, but he is also being direct that the SEC's patience with the legislative timeline has limits.

The CLARITY Act: Where It Stands

The CLARITY Act is the current principal vehicle in Congress for resolving the long-running dispute between the SEC and the Commodity Futures Trading Commission over which agency has jurisdiction over which digital assets. The bill attempts to create a clearer statutory test for when a token is a commodity versus a security, and it sets out a registration and disclosure framework for digital asset issuers and trading platforms.

The Jurisdictional Stakes

The core issue is that the existing securities and commodities statutes were not written with blockchain-native assets in mind. Whether a given token is a security depends heavily on the Howey test, a decades-old framework the courts have applied inconsistently to crypto. The CLARITY Act would replace that uncertainty with a statutory definition, giving the industry and its advisers a fixed legal baseline. For accounting firms, that baseline matters because it determines whether a client's token holdings are subject to SEC disclosure requirements, which in turn affects how those positions must be reported and what controls must surround them.

The Legislative Obstacles

The bill has faced significant headwinds. Ethics concerns tied to political figures with personal crypto interests have created procedural friction. State regulators, including the New York Attorney General, have raised objections that the federal framework would pre-empt state-level enforcement powers. Those tensions have slowed Senate progress. It remains genuinely unclear whether the bill will pass in its current form, be substantially amended, or fail to reach a floor vote before the legislative session closes. For a more detailed look at the procedural friction, see our earlier coverage of the CLARITY Act ethics deadlock and what CFOs must track.

SEC Rulemaking as the Fallback: What It Would Look Like

If the SEC proceeds unilaterally, it would almost certainly use the notice-and-comment rulemaking process under the Administrative Procedure Act. That means a proposed rule, a public comment window (typically 60 to 90 days), and then a final rule, with the realistic risk of legal challenges from industry or from state authorities arguing the agency has exceeded its statutory authority.

Likely Scope of Agency Action

Based on the SEC's existing statements and its prior (now withdrawn) guidance documents, SEC-led rulemaking would likely address several areas: the conditions under which a digital asset is treated as a security for registration purposes, disclosure requirements for issuers of tokens that meet the security threshold, conduct rules for platforms that facilitate secondary trading of those tokens, and custody requirements for registered investment advisers holding digital assets on behalf of clients. Each of those areas has direct implications for how accounting firms structure their crypto-related engagements and how CFOs document and report digital asset positions.

Timeline Uncertainty Is the Core Risk

The problem for compliance teams is timing. A full rulemaking cycle, including litigation risk at the end, could take two to four years. During that period, firms would be operating under whatever enforcement guidance exists, which is less predictable than a statute or even a final rule. The alternative, a functioning CLARITY Act, would give accounting firms and their clients a statutory text to build policies against. Atkins's statement is best read as pressure on Congress rather than a firm commitment to a specific rulemaking timeline, but the SEC's capacity to act is not in doubt.

Accounting and Audit Implications

The regulatory uncertainty has direct accounting consequences, and they run in both directions depending on what happens next.

Classification Drives Measurement

Under current US GAAP, most digital assets held by non-broker-dealers are treated as indefinite-lived intangible assets under legacy FASB guidance, though the FASB's ASU 2023-08 introduced fair value accounting for certain in-scope crypto assets for fiscal years beginning after 15 December 2024. Whether a token falls inside or outside that scope depends in part on how it is legally classified. A token reclassified as a security under SEC rulemaking could be treated differently for financial reporting purposes, potentially triggering a remeasurement and a disclosure update. Audit teams need to be tracking this contingency now rather than waiting for a rule to land.

Internal Controls and AML Obligations

SEC registration requirements, if extended to a broader set of tokens or platforms, would trigger corresponding internal control obligations: SOX-style controls for registered entities, plus the AML and KYC programme requirements that flow from FinCEN's existing Bank Secrecy Act rules. Accounting firms advising exchange clients or token issuers should be assessing whether their clients' current control environments could withstand registration-level scrutiny. Firms that have invested in capable crypto bookkeeping software and structured their general ledger mapping carefully will be better positioned to produce the records that a registration or examination process requires.

The broader compliance picture also connects to international developments. For context on how one major exchange's AML control failures led to regulatory sanction, see our coverage of the Fidelity's push for the CLARITY Act and the compliance implications for institutional participants.

What Accounting Firms and CFOs Should Do Now

Waiting for legislative or regulatory certainty before acting is a risk management failure, not a prudent strategy. The gap between the current state and whatever framework eventually arrives will require firms and their clients to retrofit controls, reclassify assets, and update disclosures under time pressure. Acting now reduces that pressure substantially.

Practical Steps for Accounting Firms

First, map every digital asset your clients hold against the current Howey test factors and note which tokens sit in the grey zone. Those are the positions most likely to be re-characterised under either CLARITY Act definitions or SEC rulemaking. Second, review how your digital asset accounting software handles reclassification events: if a token moves from commodity treatment to security treatment, can your system produce a clean audit trail of the change and the remeasurement? Third, brief your audit committee clients on the contingent liability exposure if a token they have issued or hold in significant quantity is classified as an unregistered security under a future rule.

Practical Steps for CFOs

CFOs at companies with material crypto holdings should be stress-testing their disclosure frameworks. The MD&A section of a 10-K or 10-Q should already address the regulatory uncertainty around digital assets as a known risk. If it does not, that is a gap. Beyond disclosure, CFOs should be engaging legal counsel now to understand the classification risk profile of specific token positions, and they should be ensuring that their treasury management processes are documented in a way that would survive an SEC examination. A solid crypto bookkeeping software stack, with full transaction-level records and wallet-to-ledger reconciliation, is not optional in this environment.

The Broader Regulatory Landscape

Atkins's statement does not exist in isolation. It sits inside a period of active regulatory attention to digital assets across multiple US agencies and internationally. The FATF's most recent targeted update on virtual assets, FinCEN's ongoing Travel Rule enforcement, and the SEC's parallel work on custody rules for investment advisers all point in the same direction: the compliance bar for firms touching digital assets is rising, regardless of what Congress does. An SEC that is willing to act unilaterally on market structure also has every reason to continue tightening its existing enforcement posture in the meantime.

For accounting firms and CFOs, the practical conclusion is that a US statutory framework for crypto, whether it comes from Congress or the SEC, is coming. The question is which version, on what timeline, and whether your firm's records and controls are ready when it arrives.

Frequently Asked Questions

What is the CLARITY Act and why does it matter for accountants?

The CLARITY Act is proposed US federal legislation that would draw a clearer statutory line between digital assets treated as commodities (under CFTC jurisdiction) and those treated as securities (under SEC jurisdiction). For accountants, that line determines which disclosure, registration, and reporting requirements apply to a client's token positions, and therefore how those positions should be measured and presented in financial statements.

What authority does the SEC have to act on crypto rules without Congress?

The SEC derives its rulemaking authority from existing statutes, primarily the Securities Act of 1933 and the Securities Exchange Act of 1934. It can use notice-and-comment rulemaking under the Administrative Procedure Act to define how those statutes apply to digital assets, including which tokens qualify as securities and what conduct rules apply to platforms trading them. Any such rules would be subject to legal challenge, but the agency's underlying authority to act is well-established.

How would SEC rulemaking affect the accounting treatment of digital assets?

If the SEC reclassifies a broader set of tokens as securities, it could affect how those assets are categorised for financial reporting purposes. Under FASB ASU 2023-08, in-scope crypto assets are measured at fair value, but the scope definition ties to specific asset characteristics. A legal reclassification could trigger a reassessment of whether an asset qualifies for fair value treatment or falls under a different measurement model, requiring restated disclosures in some cases.

What should a CFO do right now while the regulatory outcome is uncertain?

CFOs should ensure that their financial statement disclosures accurately reflect the regulatory uncertainty as a known risk, that their digital asset positions are documented with sufficient transaction-level detail to support a reclassification or examination, and that their legal counsel has assessed the classification risk of any material token holdings. Firms using robust digital asset accounting software with complete audit trails are better placed to respond quickly if a rule change requires remeasurement or additional disclosure.

Does the SEC's stance affect AML and KYC obligations for crypto firms?

Indirectly, yes. If the SEC extends registration requirements to additional token issuers or trading platforms, those entities would face the AML and KYC programme requirements that apply to registered broker-dealers and investment advisers under FinCEN's Bank Secrecy Act rules. Firms in the compliance advisory space should be assessing whether their crypto-sector clients have the control infrastructure to meet those obligations if registration becomes mandatory.

Source: Decrypt