The SEC proposed Regulation Crypto Assets on Aug. 18, creating two new exemptions from securities registration for crypto offerings and a safe harbor that would let tokens exit securities status once their developers finish building.
The proposal, released under Chairman Paul Atkins, is the most concrete regulatory framework the SEC has put forward for crypto markets. It follows the Commission’s March 2026 interpretive guidance on how federal securities laws apply to different types of crypto assets and marks the latest product of the SEC’s Crypto Task Force, established in January 2025.
“Regulation Crypto Assets seeks to provide crypto asset entrepreneurs and market participants with clear pathways to raise capital under the federal securities laws,” Atkins said in the statement accompanying the proposal. “Congress designed our securities laws to amplify – within specific guardrails – opportunities for entrepreneurs to innovate and build new products.”
The Startup Exemption
The first exemption is designed for early-stage projects. It would allow a one-time offering of up to $5 million over a four-year period, with no requirement that the issuer actually be a startup – any entity, individual, or group can use it as long as the conditions are met.
Issuers would file a Form NOR (Notice of Reliance) with the SEC before any covered transaction and a Form TR (Transition Report) no later than four years after. They must make principle-based narrative disclosures publicly accessible within 30 days after each calendar year-end if material changes have occurred. Financial statements are not required under this exemption.
The exemption is non-exclusive and limited to one use per issuer per crypto asset. Issuers remain subject to federal antifraud and antimanipulation laws regardless of which exemption they rely on. The SEC estimates approximately 130 offerings per year would use the new exemptions in total.
The Fundraising Exemption
The second exemption targets larger raises. It would permit offerings of up to $75 million during each 12-month period, with ongoing reporting requirements and financial statements that must be audited at higher capital-raising thresholds.
This exemption includes provisions for suspension under certain circumstances and is subject to disqualification provisions. Like the startup exemption, it is non-exclusive, meaning issuers can use other available exemptions alongside it.
The two exemptions differ significantly in their disclosure burden. The startup exemption relies on principles-based narrative disclosures – no financial statements, no audit requirements. The fundraising exemption adds audited financial statements and ongoing reporting, reflecting the larger amounts at stake.
“Regulation Crypto Assets would replace guesswork with fixed thresholds, defined disclosure obligations, and a set of conditions that issuers can measure themselves against before they make their offering – not after they are told they ‘got it wrong’ in hindsight.” – Commissioner Mark Uyeda
Comparing the Two Exemptions
| Feature | Startup Exemption | Fundraising Exemption |
|---|---|---|
| Maximum offering | $5 million (one-time) | $75 million per 12 months |
| Time limit | 4 years | Ongoing (renewable annually) |
| Financial statements | Not required | Required (audited at higher thresholds) |
| Disclosure type | Principles-based narrative | Narrative + financial + ongoing reporting |
| One-time use | Yes (per issuer per asset) | No |
| Retail investors | Yes | Yes |
The Investment Contract Safe Harbor
The third component is a conditional safe harbor that would let a crypto asset exit securities status entirely. Under current law, a token can be classified as a security if it is the subject of an investment contract. The safe harbor would allow that classification to end once an issuer has completed or permanently ceased all essential managerial efforts it promised to undertake.
In practice, this means a token that starts as a security could become a commodity or utility token once the development team delivers on its roadmap. The safe harbor replaces what has been one of the biggest uncertainties in crypto regulation: the question of when, if ever, a token stops being a security.
This addresses the so-called “Howey test” problem that has plagued the industry for years. Under the Howey test, an investment contract exists when there is an investment of money in a common enterprise with an expectation of profits derived from the efforts of others. The SEC’s proposal would create a clear off-ramp: once the issuer delivers what it promised, the token exits securities territory.
Context: The Crypto Task Force Roadmap
The proposal sits alongside a series of regulatory moves from the SEC’s Crypto Task Force. Since January 2025, the task force has published interpretive guidance classifying crypto assets into five categories: digital commodities, digital collectibles, digital tools, stablecoins, and digital securities. Each step has aimed at creating what the Commission calls “fit-for-purpose” rules for crypto markets.
The five-category framework matters because it determines which assets fall under which regulatory regime. Digital commodities like Bitcoin would not be affected by Regulation Crypto Assets since they are not investment contracts. The regulation targets assets that qualify as “covered investment contracts” – essentially, tokens that were sold as investments where buyers expected returns based on the issuer’s efforts.
Chairman Atkins framed the proposal as part of a broader strategy to “onshore innovation in crypto asset markets for generations to come.” The SEC has estimated that approximately 130 offerings per year would use the new exemptions.
Industry Reaction and What Comes Next
The proposal has drawn cautious optimism from industry lawyers. Simpson Thacher and Bartlett, in a client analysis published Sept. 4, noted that the framework “would create two exemptions from the registration requirements of Section 5 of the Securities Act of 1933” specifically for crypto assets that qualify as investment contracts.
The public comment period runs for 60 days from the date of publication in the Federal Register, which occurred on Aug. 21. After the comment period closes in mid-October, the Commission will consider responses and may revise the proposal before finalizing it. Final rules could follow in early 2027, though the timeline depends on the volume and substance of public comments.
The proposal exists alongside congressional action. The GENIUS Act, which passed the Senate Banking Committee in March 2025 and reached a full Senate vote in early 2026, would establish a federal licensing framework for stablecoin issuers with 1:1 reserve requirements. If both the SEC’s regulation and congressional legislation move forward, crypto issuers would face overlapping but potentially complementary federal oversight.
The comment period is open to anyone. Individual developers, institutional investors, exchanges, and advocacy groups can all submit feedback through the SEC’s online portal. The final rules will likely reflect a balance between the industry’s demand for flexibility and regulators’ insistence on investor protections.
For crypto projects that have been operating in regulatory limbo, the proposal offers something rare: a clear path forward. Whether the final rules survive the comment period intact remains to be seen, but the direction is unmistakable. The SEC is no longer asking whether crypto needs regulation. It is writing the rules.
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