On August 18, 2026, the SEC’s Crypto Task Force unveiled its most consequential proposal yet: Regulation Crypto Assets, a new framework of exemptions and a safe harbor built specifically for crypto offerings, rather than forcing tokens into securities rules written for the 1930s. The proposing release is now open for public comment for 60 days — and with the Commission explicitly inviting feedback on several open questions, this is a real opportunity for issuers, investors, and market participants to shape the final rule before it’s locked in. If you’re raising capital through a crypto offering, holding tokens, or simply want your perspective on the record, we can help you prepare and submit comments to the SEC before the window closes — contact us at [email protected]
The Core Problem It’s Trying to Solve
Every mechanism in this proposal starts from the same threshold question: is the crypto asset itself a security, or is it something else wrapped in what looks like an investment contract? Regulation Crypto Assets applies only to “covered investment contracts” — arrangements where the crypto asset is not itself a security (no tokenized stocks, bonds, or fund shares), but investors are putting in money expecting profit from the issuer’s efforts, the classic Howey test. Get past that gate, and an issuer has three tools to work with.
1. The Startup Exemption — Up to $5 Million Over Four Years
This is the on-ramp for genuinely early-stage projects, and it’s intentionally light-touch:
- Who can use it: Any issuer — entity, individual, or group. No U.S.-organization requirement, no investment-company restrictions specific to this exemption.
- How much, how often: Up to $5 million raised over a rolling four-year period. It’s a one-time path per crypto asset — an issuer can’t recycle it for the same token once used.
- The catch: The issuer must certify it intends to complete its promised “essential managerial efforts” within that four-year window. This exemption is built for projects with a genuine path to maturing, not indefinite fundraising under a lighter disclosure standard.
- Filing burden: No SEC qualification required — just a notice filing (Form NOR) and principles-based narrative disclosure covering ten topics (the investment contract, the offering, the crypto asset itself, management and conflicts, the network’s development plan, source code/security, tokenomics, governance, the ecosystem, and risk factors). That disclosure has to live on the issuer’s website for four years.
- Investor-friendly terms: General solicitation is permitted, there’s no accredited-investor limitation, and the securities sold aren’t subject to resale restrictions — a notably lighter touch than Regulation D.
2. The Fundraising Exemption — $20 Million to $75 Million, in Two Tiers
This path is built for more established issuers who need real growth capital, and the eligibility bar is correspondingly higher:
- Issuer eligibility: Must be U.S.-organized, with a majority of officers and directors who are U.S. citizens or residents, more than half its assets located in the U.S., and its business principally administered here.
- Who’s excluded: Development-stage shell companies without a specific business plan, registered investment companies, business development companies, issuers under a recent SEC Section 12(j) order, anyone who missed required reports in the prior two years, and anyone caught by the standard Regulation A “bad actor” disqualifications.
- Tier 1 — up to $20 million per 12-month period. Affiliated selling securityholders capped at $6 million of that. No audited financial statements required.
- Tier 2 — up to $75 million per 12-month period. Affiliated selling securityholders capped at $22.5 million. Audited financials required, prepared as though the issuer were a smaller reporting company.
- Purchaser limits apply in both tiers — unlike Regulation A: non-accredited individuals are capped at 10% of the greater of their annual income or net worth; non-accredited entities at 10% of the greater of their revenue or net assets. There’s no carve-out.
- Ongoing reporting is real, not one-and-done: annual reports (Form 1-KC) within 120 days of fiscal year-end, semiannual reports (Form 1-SC) within 90 days, and current reports (Form 1-UC) for specified material events. This tier requires an actual SEC-qualified offering statement (Form 1-CRYPTO), not just a notice filing.
3. The Safe Harbor — An Exit Ramp From Investment-Contract Status
The third piece addresses a question that’s dogged the industry for years: once a network is up and running and genuinely decentralized, why should the token still be treated as a security? Under proposed Rule 400, any issuer — whether or not it used one of the two exemptions above — can file Form TR certifying that it has “completed or otherwise permanently ceased” all the essential managerial efforts it represented or promised to investors. Once filed, the covered investment contract is deemed to cease existing, and the underlying asset is no longer subject to investment-contract regulation under federal securities law going forward. This is the mechanism that lets a token “graduate” out of SEC oversight without needing an act of Congress.
What the Commissioners Are Really Saying
Strip away the formalities, and the three statements boil down to three sound bites:
- Chairman Paul Atkins: Forcing crypto into pre-Depression-era securities rules was “a square peg in a round hole.” His design principle: “minimum effective dose, maximum freedom to build, and durable clarity under existing law.”
- Commissioner Hester Peirce: “Rules should be written so that well-intentioned people can follow them without having to abandon legitimate pursuits.” She’s specifically asking for input on whether tokens should be able to function more like equity, letting holders share in the enterprise’s growth.
- Commissioner Mark Uyeda: The sharpest line of the three — “regulation by enforcement… left market participants asking why they should even try to comply.” His ask is narrower and more technical: weigh in on whether the specific dollar thresholds and conditions are calibrated correctly.
The Clock Is Running
The comment period runs 60 days from the proposing release’s publication in the Federal Register — likely landing somewhere around late October 2026, though the exact date depends on when it’s officially published. All three commissioners built specific invitations for feedback into their statements, which means this isn’t a formality; the eventual final rule is genuinely likely to be shaped by what the Commission hears back.
Whether you’re an issuer trying to figure out which exemption fits your raise, an investor with a view on the purchaser limits, or simply someone who wants the SEC to hear a specific concern before this becomes final, now is the time to act — comments become part of the public record, and once the window closes, it closes. Reach out to us at [email protected] and we’ll help you get your comments drafted, positioned, and submitted to the SEC before the deadline.
This post is for general informational purposes and does not constitute legal advice. For guidance on how the proposed Regulation Crypto Assets framework may affect a specific offering or entity, please contact our office.