The U.S. Securities and Exchange Commission proposed new crypto regulation rules on Aug. 18, targeting token fundraising under federal securities laws. The framework, named Regulation Crypto Assets, creates two exemptions from Securities Act registration requirements and a conditional safe harbor for certain crypto assets.

The proposal follows the SEC's March 2026 interpretation of how federal securities laws apply to some crypto assets, guidance that set the legal context for the new offering rules. Chairman Paul Atkins said the agency wanted to provide clearer fundraising routes while Congress continues its work on broader market-structure legislation.

Two Paths for Crypto Token Offerings

Regulation Crypto Assets creates two exemptions from Securities Act registration requirements for certain crypto investment contracts. The first route allows an issuer to raise up to $5 million over a four-year period. The SEC designed that option as a one-time exemption for smaller offerings that meet the proposed conditions.

The second route allows issuers to raise up to $75 million during each 12-month period. That ceiling matches the cap under Regulation A's Tier 2, the existing exemption that lets smaller companies conduct public offerings without full Securities Act registration, giving issuers a familiar benchmark for scale. Issuers using either exemption must provide investors with narrative disclosures, and those using the larger exemption must also provide financial statements and meet ongoing reporting requirements, duties that parallel the financial-statement and reporting obligations already applied under Regulation A.

The SEC said the structure aims to give crypto businesses clearer fundraising routes under federal securities laws.

Conditional Safe Harbor Would Address Security Status

The proposal includes a conditional safe harbor tied to the term "investment contract." If an issuer satisfies the required conditions, the crypto asset would no longer fall under an investment contract for purposes of the Securities Act of 1933 and the Securities Exchange Act of 1934.

The term carries a long legal history. The U.S. 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 profits expected from the efforts of others, and the SEC has applied that test to token sales on a case-by-case basis for years.

Chairman Paul S. Atkins said the safe harbor would apply after an issuer completes, or permanently stops, the essential managerial efforts it promised under an investment contract. That approach focuses on the issuer's role after fundraising, using language that echoes the efforts-of-others standard at the center of the Howey test.

The proposal also addresses state securities rules. It would preempt state registration and qualification requirements for securities that issuers sell under the federal exemptions, and the same treatment would cover some secondary-market transactions linked to those exempt offerings.

SEC Targets Clearer Rules for US Crypto Markets

The SEC said the proposal seeks to reduce barriers for crypto companies that want to raise capital in the United States, aiming to give entrepreneurs defined routes to operate within federal securities law instead of relying on offshore structures or uncertain legal interpretations. Until now, token issuers have largely had to fit into general-purpose exemptions or navigate the SEC's case-by-case analysis of whether their assets are securities, an approach that frequently played out through enforcement actions.

Atkins said the Commission wants to provide clearer paths for crypto entrepreneurs while Congress works on broader legislation, and he linked the proposal to the agency's effort to modernize securities rules for digital assets. If adopted, the framework would create a regulatory route under current law.

The proposal arrives as lawmakers continue work on crypto market structure legislation. The SEC's rulemaking process moves on a different track and focuses on securities offerings involving certain crypto investment contracts. The Commission must review public feedback before deciding on a final version.

Meanwhile, the odds of the CLARITY Act passing in 2026 have continued to decline, with Polymarket pricing the probability at 21%. The market's odds are down 44%, signaling weaker expectations for the bill's passage this year.

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Public Comment Period Opens for 60 Days

The SEC will keep the public comment period open for 60 days after the proposed release appears in the Federal Register. Market participants, legal experts, issuers, investors, and stakeholders can submit feedback on the proposed exemptions, disclosure rules, and safe-harbor conditions.

The Commission may revise the proposal after reviewing those comments, and any final rules would need formal SEC approval before taking effect.

This article is for informational purposes only and does not constitute financial or legal advice. Digital assets can experience sharp price movements.