SEC Proposes Tailored Registration Exemptions for Crypto Assets

The US Securities and Exchange Commission (SEC) has proposed "Regulation Crypto Assets," a new and comprehensive framework for offerings of certain crypto assets deemed to be securities. The proposal distinguishes between a crypto asset and the "covered investment contract" to which it is subject, applying only when the asset itself is not a security like tokenized equity.

The proposed rules establish two new transactional exemptions from registration. A "startup exemption" would permit offerings up to $5 million over four years with streamlined, website-based disclosures. A tiered "fundraising exemption," modeled on Regulation A, would allow for offerings of up to $20 million (Tier 1) or $75 million (Tier 2) in a 12-month period, with ongoing reporting obligations.

For sophisticated counsel, this is the first potential purpose-built regulatory pathway for crypto offerings, moving beyond simple application of the Howey test. If adopted, it would create clearer compliance obligations but also limit availability to US-based entities. The proposal also includes a non-exclusive safe harbor for determining when an investment contract has ended. Comments are due by October 20, 2026, and the final rules could reshape US crypto capital formation.