SEC Unveils 'Regulation Crypto Assets' Proposal

The US Securities and Exchange Commission has released a landmark proposal, “Regulation Crypto Assets,” its first comprehensive rulemaking for the offering of certain digital assets. The 400-page release introduces a bespoke framework for crypto assets sold as part of an investment contract. It establishes two new registration exemptions: a “startup exemption” allowing raises of up to $5 million over four years with streamlined disclosures, and a two-tiered “fundraising exemption,” modeled on Regulation A, for raises up to $75 million per year with more extensive reporting.

This proposal marks a significant potential shift from the SEC’s long-standing regulation-by-enforcement approach toward creating a tailored, formal pathway for digital asset capital formation. For clients, it could provide much-needed clarity on how to launch token projects in the US without undergoing a full public registration. A key feature is a proposed safe harbor allowing an issuer to formally end the investment contract, potentially permitting the underlying token to trade as a non-security. However, the larger exemption includes a strict US-nexus test that could exclude many projects using offshore foundations. The comment period is open until October 20, 2026, and the final form of the rule will be critical for the industry.