So, it looks like money market funds dodged another yet another bullet, but don't take off your Kevlar vests just yet.

Money fund expert Peter Crane, who is president of Crane Data, which publishes the Money Fund Intelligence newsletter, says that the new proposal, which is expected to be unveiled in the coming week or so, has been "watered down to the point that it no longer threatens the money fund industry."

However, he did warn that no one is certain what the final proposal will contain, but according to Washington scuttlebutt, the SEC's leadership has made a number of changes.

For example, Crane said, the floating NAV will likely be limited to just prime institutional funds.

While this still creates headaches for the largest money fund operators, Crane says this compromise may make the proposal more palatable to the other SEC commissioners, who had put the kibosh on the regulations previous SEC Chair Mary Schapiro had been promoting.

"The thought of making tens of millions of shareholders transact their cash balances at something other than a dollar was a little silly to start with," Crane said. "There would have been a revolt had they actually tried to push for a full floating NAV."

Crane said that the capital buffer idea may also be jettisoned.

"This undoubtedly would have been a major burden to the money fund business," he said. "The industry could not support something that would have grown to one to three percent of assets. It was seen as unworkable and extremely expensive."

Moreover, Crane said that the proposal may also include redemption gates and buffers, which industry leaders have pushed for from the beginning.

Perhaps most importantly, Crane said that the new proposals are an indicator that the new regime under new chair Mary Jo White will be "kinder and gentler" to the industry.

"With Mary Jo White, everything is beginning anew. There is no baggage. There is no history. Every mention she has made so far has stressed that she doesn't want to seriously harm the business model or eviscerate money market funding." 

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