The U.S. Securities and Exchange Commission voted on August 18, 2026, to propose "Regulation Crypto Assets," the first dedicated federal offering framework for digital tokens. The 402-page proposing release (Release No. 34-10042) creates two new exemptions from the Securities Act of 1933 and a conditional safe harbor that could allow crypto assets to leave investment contract treatment once a project's essential managerial efforts are completed or permanently ceased.
What the proposal contains
The regulation establishes two pathways for crypto issuers to raise capital without triggering full securities registration. The **startup exemption** is a one-time option allowing offerings of up to $5 million over a four-year period. Issuers would file a notice of reliance on a new Form NOR and provide principles-based narrative disclosures to investors.
The **fundraising exemption**, modeled partly on Regulation A, permits offerings of up to $75 million in any 12-month period. It requires a more detailed filing on Form 1-CRYPTO, including financial statements and a discussion of the issuer's operations and financial condition. Issuers using this tier would also face ongoing reporting obligations. Neither exemption is exclusive — antifraud and antimanipulation provisions of federal securities law continue to apply.
Conditional safe harbor for investment contract exit
The proposal introduces a codified safe harbor from the term "investment contract" in federal securities definitions. Under the framework, a qualifying crypto asset could exit investment contract status when the issuer completes its promised essential managerial efforts or permanently stops those efforts. The SEC described the provision as designed to "provide market participants with greater clarity as to when a covered investment contract has ceased to exist because of a lack of essential managerial efforts."
This safe harbor addresses a persistent concern in the crypto industry: once a token is sold in a manner that constitutes an investment contract, it can remain subject to securities law indefinitely. The proposed framework would set conditions under which that classification could end.
State preemption and secondary market treatment
Regulation Crypto Assets would add a new definition of "qualified purchaser" under the Securities Act, preempting state securities law registration and qualification requirements for covered investment contracts issued under the new exemptions. The preemption would also extend to certain secondary market transactions, including those involving tokens initially sold under other federal exemptions, provided the issuer continues to meet filing and reporting requirements.
The SEC acknowledged that concerns about the definitions of "exchange," "broker," and "dealer" under the Exchange Act as applied to crypto transactions remain unresolved, stating that "this proposal does not address those recommendations." This means intermediaries facilitating secondary trading may still face uncertainty about their registration obligations.
Political and market context
The proposal arrives as Congress debates the CLARITY Act, which stalled in the Senate over a 60-vote procedural hurdle. SEC Chairman Paul S. Atkins linked the proposal to the Commission's broader effort to clarify securities requirements for crypto markets and reduce incentives for issuers to establish operations outside the United States.
Bitcoin rose following the announcement, consistent with the market's positive reception of regulatory clarity in the sector. The public comment period will remain open for 60 days after publication of the proposing release in the Federal Register.
The proposal builds on the SEC's March 2026 interpretive guidance on the application of federal securities laws to crypto asset transactions. It does not address the status of crypto assets that are themselves securities, focusing instead on investment contracts involving crypto assets.
Sources
- SEC Press Release 2026-76, "SEC Proposes New Regulation Crypto Assets," August 18, 2026 (https://www.sec.gov/newsroom/press-releases/2026-76-sec-proposes-new-regulation-crypto-assets)
- Baker Botts, "SEC Proposes 'Regulation Crypto Assets'," August 2026 (https://www.bakerbotts.com/thought-leadership/publications/2026/august/sec-proposes-regulation-crypto-assets)
- 36Crypto, "SEC Proposes Crypto Rules With $75 Million Fundraising Exemption," August 19, 2026 (https://36crypto.com/sec-proposes-crypto-rules-with-75-million-fundraising-exemption/)
