The SEC's latest crypto proposal is less about the $75 million fundraising cap and more about a legal question that has troubled the US market for years: if a token is sold through an investment contract, does securities law apply to it forever?
Regulation Crypto Assets aims to answer that.
Published in the Federal Register on August 21, the proposal would establish dedicated fundraising routes for certain crypto investment contracts, along with a process allowing issuers to argue that the original investment contract has ended.
That could offer token issuers a more workable path into the US market. It would not, however, bring every crypto asset outside SEC oversight or make existing securities obligations disappear.
What Is Regulation Crypto Assets?
Regulation Crypto Assets is an SEC rule proposal covering what it calls “covered investment contracts.” Broadly, this refers to a transaction in which a crypto asset that is not itself a security is offered as part of an investment contract.
That distinction matters.
A token may function as an independent digital asset while the agreement, promises and fundraising arrangement surrounding its sale constitute a securities transaction. The proposed framework focuses on that transaction instead of assuming that the token must carry the same legal status indefinitely.
The proposal was issued on August 18 under file number S7-2026-27. It remains open for public comment until October 20, 2026. It is not yet available for issuers to use.
A Smaller Route for Crypto Startups
The proposed startup exemption would allow an eligible issuer to raise up to $5 million over a period of no more than four years.
This is designed for projects that still need to complete the managerial work described to investors. The issuer would have to file notices at the beginning and end of the exemption period and provide public disclosures while relying on it.
Those disclosures would address subjects that matter specifically to token buyers, including the project’s development plan, governance, source code, security, token allocation, economic design and risks.
The exemption would permit retail participation and would not automatically impose conventional resale restrictions. That flexibility is significant, but it comes with liability. Federal antifraud and antimanipulation provisions would continue to apply.
The $75 Million Fundraising Exemption
The larger exemption would allow eligible issuers to raise up to $75 million in a 12-month period.
It is partly modeled on Regulation A and contains two tiers. Smaller offerings would face lighter requirements, while issuers using the upper tier would need to provide financial statements and ongoing reports.
The $75 million figure therefore should not be read as an unrestricted token-sale allowance. An issuer would still have to satisfy eligibility rules, disclose material information and remain current with its reporting obligations.
Certain issuers and offerings would not qualify. The proposal contains bad-actor disqualification provisions and does not cover asset-backed securities. Its protections also depend on continued compliance rather than a one-time filing.
The SEC fact sheet presents the exemption as an alternative to full registration, not an escape from securities regulation.
When Does the Investment Contract End?
The proposed safe harbor may prove more consequential than either fundraising limit.
Under the proposal, an issuer could file a transition report after completing or permanently ending all the essential managerial efforts it represented or promised to perform. The filing would need to explain why the relevant conditions had been satisfied.
If the safe-harbor requirements were met, the SEC would treat the covered investment contract as having ended. The associated crypto asset would no longer be considered subject to that investment contract for the relevant definitions of a security.
This approach avoids treating “decentralization” as a vague finish line. The decisive question would be whether the issuer delivered what it told investors it would deliver.
A team that promised to build a network, develop core software and create a functioning application would need to address those particular commitments. Calling the project decentralized would not be enough.
Why the Proposal Matters for Token Issuers
US token fundraising has often forced projects into an awkward choice. They could attempt to comply with rules designed for traditional securities, restrict access to US buyers or build from another jurisdiction.
Regulation Crypto Assets could add another option: raise capital under crypto-specific disclosures, complete the promised work and use a defined procedure to establish that the investment contract has ended.
The proposal could also reduce differences between state requirements. It would preempt certain state registration and qualification rules for qualifying offerings and secondary transactions, provided the issuer remained compliant with the federal framework.
This would make the process more consistent, but it would not remove the need for legal analysis. Issuers would still have to determine whether their arrangement qualifies, which exemption applies and whether their disclosures accurately describe the project.
What It Could Mean for Exchanges and Investors
The proposal could change the information available before a token reaches the secondary market.
Instead of relying mainly on project websites, social posts and tokenomics graphics, investors could receive standardized disclosures covering insider allocations, development commitments, governance, security and the use of proceeds.
Exchanges and other market intermediaries might also gain a clearer record for evaluating how a token entered circulation. Filing history, ongoing reports and any transition report could become relevant evidence when assessing the asset’s regulatory position.
None of this would certify that a project is valuable or technically sound. SEC compliance addresses disclosure and legal obligations. It does not guarantee adoption, liquidity or investment returns.
The Questions the Proposal Does Not Settle
Regulation Crypto Assets deals primarily with capital formation and the ending of an investment contract. It does not create a complete US crypto market structure.
Congress would still need to settle wider questions about SEC and CFTC jurisdiction, exchange registration, spot-market supervision and the treatment of digital commodities. SEC Chairman Paul Atkins acknowledged this limitation, however, arguing that legislation remains necessary for rules that can survive changes in agency leadership.
The safe harbor may also create its own disputes. Issuers and regulators could disagree over whether promised managerial work was truly completed, whether activity was merely transferred to an affiliated organization or whether investors continued to depend on the original team.
A transition report would provide a procedure. It would not eliminate difficult factual judgments.
A Framework, Not a Free Pass
The SEC crypto rule proposal marks a change in regulatory method. Instead of forcing every token transaction into a framework built for conventional shares, it tries to address how crypto projects actually raise capital and develop networks.
Its central idea is straightforward: a crypto asset and the investment contract used to sell it are not necessarily the same thing.
Putting that principle into practice will be harder. Projects would still need to make accurate disclosures, document their commitments and explain when those commitments have been fulfilled. Investors would still have to judge whether the network has real demand and whether its token design creates lasting value.
For continuing coverage of crypto regulation and market structure, readers can explore the latest research on Tapbit. Tapbit users may access their accounts through the login page, while new users can begin from the registration page.
Frequently Asked Questions
Is Regulation Crypto Assets already in effect?
No. It is an SEC proposal published in the Federal Register on August 21, 2026. The public comment period closes on October 20, 2026. The SEC must complete additional rulemaking steps before any final regulation can take effect.
Would the proposal allow crypto startups to raise $5 million without registration?
The proposed startup exemption would permit eligible issuers to raise up to $5 million over a maximum four-year period without full Securities Act registration. Issuers would still face filing, disclosure, antifraud and antimanipulation requirements.
Can a crypto project raise up to $75 million under the proposal?
An eligible issuer could raise up to $75 million in a 12-month period under the proposed fundraising exemption. Access to the upper tier would involve financial statements, ongoing reporting and other compliance conditions.
