SEC Proposes Regulation Crypto Assets: Tailored Offering Exemptions and an Investment Contract Safe Harbor

On August 18, 2026, the Securities and Exchange Commission proposed a new rule that would establish an offering framework for evaluating investment contracts tied to crypto assets, titled “Regulation Crypto Assets.” The proposal builds directly on the Commission’s March 2026 interpretive release, which established a five-category taxonomy for crypto assets and set out the Commission’s perspective on when during the “lifecycle” of transactions involving crypto assets those transactions become—and stop being—investment contracts subject to securities laws. Where that release addressed classification of crypto assets and transactions involving crypto assets, Regulation Crypto Assets addresses capital formation: it gives issuers of covered investment contracts new, tailored paths to raise money without full Securities Act registration, and a mechanism to certify that an investment contract has run its course.

Two New Offering Exemptions

The proposal creates two non-exclusive exemptions from Securities Act registration for “covered investment contracts,” i.e., a contract, transaction, or scheme involving crypto assets that constitutes an investment contract.

A proposed “startup exemption” would establish a one-time, four-year window exempting offerings of up to $5 million from registration requirements. Issuers relying on it would need to make public filings at the start and end of the exemption period and provide investors with principles-based narrative disclosures throughout. The purpose of the exemption is to provide “temporary relief” from registration to earlier-stage projects that are still working toward the “essential managerial efforts they represented or promised investors they would engage in under the covered investment contract.”

The rule would also establish a “fundraising exemption,” modeled in part on Regulation A. That exemption would establish two tiers of exempt offerings. Tier 1 would permit offerings of up to $20 million in a twelve-month period; Tier 2 would permit offerings of up to $75 million. Issuers under this exemption must publicly file the same narrative disclosures required under the startup exemption, along with issuer financial statements and a narrative discussion of the issuer’s financial condition. Tier 2 issuers must submit audited financial statements. Ongoing reporting obligations, tailored from Regulation A’s framework, would follow.

Issuers relying on either exemption would remain fully subject to the antifraud and antimanipulation provisions of the federal securities laws—the exemptions relieve registration burden, not liability exposure.

The “Investment Contract Safe Harbor”

The proposal’s second major component gives issuers a defined off-ramp from investment contract status. Under the safe harbor, an issuer that has completed—or abandoned—the essential managerial efforts it promised investors, and that is not making new promises of further managerial efforts, may file a public certification supported by an analysis of how it satisfies the safe harbor’s conditions. Once that certification is made, the Commission would treat the investment contract as having ceased to exist, and the underlying crypto asset would no longer be treated as a security.

This formalizes and operationalizes the lifecycle concept introduced in the Commission’s March interpretive release. Where that release described conceptually how transactions in crypto assets might cease to qualify as investment contracts, the safe harbor gives issuers a concrete, self-executing certification procedure to invoke that outcome.  The safe harbor seeks to address what had been one of industry’s central complaints about the prior enforcement-driven approach: that a token, once the subject of an investment contract, effectively remained one indefinitely regardless of the project’s subsequent decentralization or completion.

State Law Preemption

Regulation Crypto Assets would also preempt state securities registration and qualification requirements for offers and sales made under any Regulation Crypto Assets exemption. That preemption would extend to certain secondary market transactions—by parties other than the issuer, an underwriter, or a dealer—involving covered investment contracts, provided the issuer continues to satisfy the applicable exemption’s ongoing disclosure or reporting conditions. For issuers and platforms currently navigating a patchwork of state blue-sky requirements alongside federal exemptions, this is one of the proposal’s more consequential structural changes.

What Comes Next

The public comment period will run for 60 days following publication of the proposed release in the Federal Register. In his accompanying statement, Chairman Paul Atkins framed the proposal as part of a broader effort to bring crypto capital formation onshore and credited Commissioner Hester Peirce’s safe harbor proposal as the intellectual foundation for the proposed rule. Atkins was also candid that rulemaking alone has limits, noting that durable, “future-proofed” market structure rules ultimately depend on Congress advancing the CLARITY Act.

Read together with the Commission’s March interpretive release, Regulation Crypto Assets represents the second half of a two-part framework: one release tells market participants when a transaction in a crypto asset qualifies as an investment contract; the other tells issuers how to raise capital, and eventually exit registration obligations, while it is one. Issuers currently structuring token offerings; funds and platforms evaluating secondary trading in tokens subject to investment contracts; and companies weighing whether and how to certify out of investment contract status should begin assessing how the proposed exemptions and safe harbor conditions would apply to their facts now, ahead of the close of the comment period.