On 18 August 2026, the US Securities and Exchange Commission proposed Statement on Regulation Crypto Assets.1 The proposal creates a tailored securities offering framework for crypto asset markets. It covers investment contracts involving non-security crypto assets, termed covered investment contracts. Two new exemptions from Securities Act registration are proposed. A startup exemption would permit offerings of up to US$5 million over a four year period. A fundraising exemption would permit offerings of up to US$75 million in each twelve month period. The proposal also includes a conditional investment contract safe harbor. Under it, a crypto asset ceases to be subject to an investment contract once essential managerial efforts end. The rules would preempt state securities registration requirements for exempt offerings.2 The proposal builds on the Commission's March 2026 interpretive release on crypto assets.3 Comments are due 60 days after Federal Register publication. This is the SEC's first formal crypto offering rulemaking.
From Interpretation to Rulemaking
The proposal is the rulemaking follow through to the Commission's interpretive release of 17 March 2026, which addressed how the investment contract analysis under SEC v. W.J. Howey Co. applies to crypto assets and how a non-security crypto asset may cease to be subject to an investment contract.3 Chairman Paul S. Atkins previewed the three pillar architecture, a startup exemption, a fundraising exemption and an investment contract safe harbor, in remarks the same day. Five months later, the blueprint has become a 402 page proposing release that would add a new Part 228 to Title 17 of the Code of Federal Regulations.2
The Chairman's statement frames the departure in unsparing terms. He states that the Commission "actively undermined capital formation with regard to this asset class in the form of regulation by enforcement and disingenuous offers to 'come in and register'", and that requiring crypto issuers to conform to rules "which were not adopted with these assets in mind, and many of which originated in the 1930s" produced a "'square peg in a round hole' approach" that impeded capital formation and drove investment offshore.1
The Two Offering Exemptions
The startup exemption would permit offerings of covered investment contracts up to US$5 million during a four year period.1 The fundraising exemption would permit offerings of up to US$75 million in each twelve month period.2 Each exemption carries principles based disclosure requirements tailored to crypto assets, and the fundraising exemption additionally requires disclosure of the issuer's financial condition, including financial statements that must be audited at certain capital raising thresholds.1
Issuers relying on either exemption would remain subject to the antifraud and anti-manipulation provisions of the federal securities laws throughout.2 The exemptions relieve registration under section 5 of the Securities Act 1933; they do not relieve honesty.
The calibration in the above places the fundraising exemption well above the US$5 million cap of Regulation Crowdfunding and the US$75 million ceiling of Regulation A Tier 2, but with disclosure obligations designed for token economics rather than share capital. For token projects that spent the last cycle structuring offshore foundations and excluding US persons, the exemption is priced to make onshore issuance the simpler path.
The Investment Contract Safe Harbor
The proposed safe harbor operates on the definitions of "security" under both the Securities Act 1933 and the Securities Exchange Act 1934.2 Under it, if the issuer certifies to the Commission that it has ceased or terminated all essential managerial efforts that it promised to undertake under the investment contract, and satisfies certain other conditions, the Commission would no longer deem the non-security crypto asset to be subject to an investment contract and, therefore, no longer subject to the authority of the Commission.1
The mechanism in the above answers the question that has shadowed token offerings since the DAO Report: when, if ever, does a token sold under an investment contract stop being one. The proposal locates the answer in the Howey logic itself. The security is the contract, not the asset, and when the promised managerial efforts on which purchasers relied have ended, the contract has nothing left to attach to. The certification mechanism converts that doctrinal position into an administrable exit, with a defined regulatory lifecycle from exempt fundraising through network development to decentralised operation outside SEC jurisdiction.
State Preemption and Secondary Markets
The proposed rules would preempt state securities law registration and qualification requirements with respect to offers and sales of securities issued under a Regulation Crypto Assets exemption, as well as certain secondary market transactions.2 The preemption in the above removes the fifty state blue sky overlay that has complicated every prior exempt token offering structure, and the extension to secondary transactions addresses the aftermarket uncertainty that made even compliant primary offerings hard to build on.
The Peirce Lineage and the Legislative Dimension
Chairman Atkins credited Commissioner Hester M. Peirce, stating that "today's action is a fulfillment of her original idea" and recognising her 2020 safe harbor proposal as laying the groundwork for the rulemaking.1 Commissioner Peirce's own statement, titled "Filling the Regulatory Tank", frames the proposal as completing the concept she advanced in her 2020 remarks "Running on Empty".4
The Chairman stated that "legislation remains indispensable to enacting 'future-proofed' rules of the road that are durable enough to protect the work we are undertaking today from being unwound by a future rogue regulator", confirming continued SEC support for delivering the CLARITY Act to the President's desk.1
Footnotes
- Chairman Paul S. Atkins, "Statement on Regulation Crypto Assets: Fit-for-Purpose Exemptions for Crypto Market Innovation", 18 August 2026, available at www.sec.gov/newsroom/speeches-statements/atkins-statement-regulation-crypto-assets-081826; US Securities and Exchange Commission, "SEC Proposes New Regulation Crypto Assets", press release 2026-76, 18 August 2026.
- US Securities and Exchange Commission, Regulation Crypto Assets, proposing release, Release Nos. 33-11434 and 34-106150, File No. S7-2026-27, 18 August 2026 (proposing a new Part 228 to Title 17 CFR).
- US Securities and Exchange Commission, "Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets", Release No. 33-11412, 17 March 2026.
- Commissioner Hester M. Peirce, "Filling the Regulatory Tank: Regulation Crypto Assets Proposing Release", 18 August 2026; Commissioner Hester M. Peirce, "Running on Empty: A Proposal to Fill the Gap Between Regulation and Decentralization", 6 February 2020.
