The U.S. Securities and Exchange Commission (SEC) has proposed Regulation Crypto Assets, publishing the rule in the Federal Register under Release No. 33-11434 and File No. S7-2026-27. The proposal creates a tailored offering regime for what the SEC calls “covered investment contracts” involving crypto assets — not a blanket carve-out for Bitcoin, Ethereum, or any other established token.

TODAY: The SEC proposed new rules, “Regulation Crypto Assets,” that would create a clear and fit-for-purpose framework for certain investment contracts involving crypto assets. pic.twitter.com/SAA2sErMXF

— U.S. Securities and Exchange Commission (@SECGov) August 18, 2026

That distinction sits at the center of the rule text itself. The framework offers two new registration exemptions and a conditional safe harbor, but a token’s status under federal securities law still depends on how an asset is offered, what an issuer promises investors, and whether specific conditions are met — not on a token’s name, age, or market capitalization.

SEC Chairman Paul Atkins framed the proposal as a fit-for-purpose alternative to forcing crypto offerings into disclosure rules that originated in the 1930s. The rulemaking also extends the commission’s turn away from the enforcement-led approach of the Gensler era, when the SEC brought a wave of cases against exchanges and token issuers on the theory that many digital assets were unregistered securities. The public comment period runs through October 20, 2026, meaning nothing in the proposal is final law yet — and under standard rulemaking procedure, the SEC will review the comments it receives before the commissioners vote on any final rule, which can differ from the proposal or be withdrawn entirely.

What the Regulation Crypto Assets Proposal Would Cover

Regulation Crypto Assets introduces two exemptions from the registration requirements of Section 5 of the Securities Act of 1933.

The first, a startup exemption, would let qualifying issuers raise up to $5 million during a rolling four-year period without full registration. It is aimed at early-stage projects that need capital before a network or protocol is functional enough to support a larger raise.

The second, a fundraising exemption, is far more significant for active token offerings: it would permit up to $75 million in capital during any 12-month period, a structure the SEC’s own release compares in spirit to Regulation A.

Both exemptions require issuers to provide principles-based narrative disclosures — plain-language explanations of the project, the crypto asset, and the risks involved — rather than the line-item disclosures typical of a full S-1 registration.

CLARITY ACT: SEC Chair Paul Atkins says the SEC itself was “weaponized” against crypto, as he unveils its most historic step yet. Atkins says Regulation Crypto Assets answers the question “that has puzzled innovators since the birth of the blockchain,” letting projects raise… pic.twitter.com/d3GRdWnw7m

— Coin Bureau (@coinbureau) August 18, 2026

The “CLARITY ACT” reference points to the parallel legislative track: the market-structure bill passed the House in July 2025 with bipartisan support and would divide oversight of digital assets between the SEC and the Commodity Futures Trading Commission — a jurisdictional split that the SEC’s securities-law proposal does not itself settle.

The larger exemption carries heavier obligations. Issuers relying on the $75 million pathway must provide financial statements and comply with ongoing reporting requirements after the raise closes. Atkins’ own statement on the proposal adds that the fundraising exemption requires disclosures about an issuer’s financial condition, including financial statements that must be audited once capital raised crosses certain thresholds — a detail meant to scale investor protection with the size of the raise rather than eliminate it.

Neither exemption functions as deregulation. Both are opt-in pathways that trade some registration burden for narrower, more targeted disclosure, and issuers who choose either one remain fully exposed to enforcement if they misrepresent the offering. For a fuller breakdown of the mechanics, ICO Bench’s earlier coverage of the Regulation Crypto Assets proposal walks through the fundraising exemption’s disclosure and antifraud obligations in more detail.

Why the Proposal Does Not Automatically Exempt Bitcoin or Ethereum

The proposal’s most consequential piece for secondary-market traders is the conditional safe harbor from the term “investment contract” as it appears in the definitions of “security” under both the Securities Act of 1933 and the Securities Exchange Act of 1934. That term carries decades of legal weight: the Supreme Court’s 1946 decision in SEC v. W.J. Howey Co. defined an investment contract as an investment of money in a common enterprise with a reasonable expectation of profits derived from the efforts of others — the framework the SEC has applied to token sales since its 2017 report on The DAO.

If an issuer satisfies the safe harbor’s conditions, the crypto asset in question would be deemed not subject to an investment contract for purposes of those definitions — but that outcome is conditional, not automatic, and it applies asset-by-asset rather than to crypto broadly.

Nothing in the SEC’s rule text names Bitcoin, Ethereum, or any specific token as exempt. The safe harbor is structured around issuer conduct: a project must have completed or permanently ceased the essential managerial efforts it promised investors, among other conditions, before the underlying token could be considered outside investment-contract status. That condition tracks Howey’s “efforts of others” prong — the question becomes whether any promised managerial effort remains for investors to depend on.

The SEC did not pass a crypto law. It proposed one. Regulation Crypto Assets (Aug 18): raise up to $5m over four years, or $75m a year with extra reporting. There is also a path for a token to leave “investment contract” treatment. Comments close Oct 20. It can still change or…

— AdrianKBL ༼ つ ◕_◕ ༽つ (@AdrianKBL) August 24, 2026

That is a certification-based process tied to a specific offering’s history, not a market-wide determination.

This matters because the SEC’s proposal defines a “covered investment contract” narrowly: the crypto asset must not itself be a security, and no other asset can be bundled into the same contract. Tokens that were sold as part of arrangements involving equity, revenue shares, or other securities remain outside this framework entirely and stay subject to ordinary securities regulation.

The same logic explains why issuer conduct, not a token’s public profile, continues to drive SEC scrutiny — a pattern visible in ICO Bench’s coverage of how token prominence has not shielded issuers from investigation when disclosures or promises to investors were misleading.