On August 18, 2026, the Securities and Exchange Commission (SEC or Commission) proposed Regulation Crypto Assets, which would establish a regulatory framework for offerings of certain investment contracts involving crypto assets (Covered Investment Contracts).¹ This is the SEC’s first proposal designed expressly for crypto asset offerings, and it represents a significant development for an industry that has sought durable, fit-for-purpose guidance on these issues for years. While important questions remain and the proposal could change before any final rules are adopted, Regulation Crypto Assets would provide clarity on issues that have long been the subject of uncertainty and enforcement-driven regulation.

The proposal aligns with a preview that SEC Chair Paul Atkins delivered in a speech at the D.C. Blockchain Summit earlier this year.² The regulation would establish two new exemptions from the registration requirements of the Securities Act of 1933, as amended (Securities Act), for offerings of Covered Investment Contracts. The “Startup Exemption” would exempt offerings of up to $5 million during a four-year period. The “Fundraising Exemption” would exempt offerings of up to $75 million during each 12-month period. The regulation would also provide a “conditional safe harbor” from the definition of “investment contract,” and it would preempt certain state securities laws that would otherwise apply to offerings of Covered Investment Contracts. The proposal builds on prior work by the Commission, the Crypto Task Force and SEC staff, including the joint interpretation published by the SEC and the Commodity Futures Trading Commission in March of this year (March Interpretation), which addressed the circumstances under which a crypto asset that is not itself a security may become “subject to” an investment contract and thus fall within the scope of the federal securities laws.³ The SEC designed the proposal based in large part on comment letters submitted to the Crypto Task Force, many of which responded to a request for comment published by SEC Commissioner Hester Peirce in February 2025.⁴

Regulation Crypto Assets would provide greater clarity and durable rules to issuers of Covered Investment Contracts while the Digital Asset Market Clarity Act (CLARITY Act) legislation remains pending. However, unlike the proposed CLARITY Act, Regulation Crypto Assets would address a comparatively narrow issue in the regulation of crypto markets (i.e., the sale of Covered Investment Contracts). It would not address the sale of crypto assets that are themselves securities, and it would not address other securities law issues, such as registration requirements for intermediaries. Comments are due on October 20, 2026.

I. General Provisions (Subpart A)

a. Scope

Regulation Crypto Assets would exempt certain offerings of Covered Investment Contracts from the registration provisions of the Securities Act. “Covered Investment Contract” would include any investment contract that meets the following requirements: (1) a crypto asset is subject to the investment contract, (2) such crypto asset is not a security and (3) no asset other than such crypto asset is subject to the investment contract. The Commission has explained that, under S.E.C. v. Howey, a crypto asset can become subject to an investment contract when “an issuer offers it by inducing an investment of money in a common enterprise with representations or promises to undertake essential managerial efforts from which a purchaser would reasonably expect to derive profits.”⁵ For example, the SEC may find that an issuer has sold a Covered Investment Contract if the issuer were to sell a non-security crypto asset with the promise to develop certain functionalities or features on the blockchain together with a business plan and an explanation of how holders of the non-security crypto asset will earn a profit.⁶

The proposed regulation would be a nonexclusive safe harbor, meaning that an issuer that attempts to rely on Regulation Crypto Assets would not be precluded from claiming the protection of another exemption, such as Regulation D or Securities Act Section 4(a)(2). Nonetheless, other exemptions may not be available for offerings of Covered Investment Contracts. Regulation A, for example, is only available with respect to offerings of equity securities, debt securities and equity-related convertible securities. Regulation Crypto Assets may also be more flexible than other exemptions. Unlike Rule 506(c) of Regulation D, Regulation Crypto Assets would not require issuers to sell only to accredited investors. And unlike securities sold in Regulation D and Section 4(a)(2) offerings, Covered Investment Contracts sold in offerings under Regulation Crypto Assets would not be “restricted securities or otherwise subject to rule-based transfer restrictions."⁷

b. Disclosure Requirements

To rely on any of the exemptions in Regulation Crypto Assets, an issuer would be required to make certain disclosures to investors. The SEC proposing release acknowledges that a “prominent theme” in Crypto Task Force submissions and public commentary is that current SEC disclosure requirements do not elicit the information that is likely to be material to investors in Covered Investment Contracts.⁸ The proposed regulation would require narrative disclosures regarding (i) the Covered Investment Contract; (ii) the offering; (iii) the crypto asset subject to the investment contract; (iv) management, related persons and conflicts of interest; (v) the associated crypto network or crypto application and the plan of development; (vi) information security and source code; (vii) the economics and allocations of the subject crypto asset; (viii) governance; (ix) the subject crypto asset ecosystem (i.e., the system or network of contributors or participants that support and interact with the subject crypto asset and associated crypto network or associated crypto application); and (x) risk factors. The required method of disclosure would depend on the applicable exemption, as detailed in the following sections.

Notably, the SEC explains that its “principles-based approach” to disclosure is intended to provide sufficient flexibility so that the proposed rules can accommodate future developments in crypto markets.⁹ Proposed Rule 103(b)(2) would require issuers to disclose the “material terms of the offering.” It may be more difficult to conduct a materiality analysis with respect to Covered Investment Contracts, as opposed to more traditional securities. Unlike with most other securities, the value of a Covered Investment Contract may depend on the utility of the underlying crypto asset rather than the anticipated future cash flows of the issuer. In fact, the Commission acknowledges in its economic analysis that “[i]n contrast to traditional securities, whose value may depend on ownership rights and/or expected cash flows, the value of crypto assets typically depends on their utility and security.”¹⁰ Thus, the type of information that may be material to a Covered Investment Contract is likely to be different from the type of information typically found in securities disclosures. Issuers should consider whether additional guidance is needed on the application of the principles discussed in the release to specific crypto projects. 

c. Disqualification

The exemptions under Regulation Crypto Assets would not be available to any person disqualified under the “bad actor” provisions in Rule 262 of Regulation A.¹¹

II. The Startup Exemption (Subpart B)

The Startup Exemption would exempt “covered transactions”¹² in Covered Investment Contracts of up to $5 million during a four-year period (adjusted for inflation). The purpose of the Startup Exemption is to permit issuers to sell Covered Investment Contracts during the early stages of a crypto project. The Commission suggests two rationales for the exemption. First, existing disclosure requirements may not elicit the information that is likely to be material to investors and may instead impose undue compliance costs. Second, as the Commission explained in its March Interpretation, a non-security crypto asset that was offered and sold subject to an investment contract does not necessarily remain subject to the associated investment contract in perpetuity. Once the issuer has fulfilled or abandoned its representations and promises to investors or it is no longer reasonable to expect the issuer to fulfill its representations and promises, the investment contract may terminate. The Startup Exemption would allow such an issuer to sell Covered Investment Contracts for four years in an unregistered offering and fulfill its representations and promises to investors. 

Issuers that rely on the Startup Exemption would remain subject to the anti-fraud and anti-manipulation provisions of the federal securities laws, including but not limited to Section 17 of the Securities Act and Section 10 of the Securities Exchange Act of 1934, as amended (Exchange Act).

To rely on the Startup Exemption, an issuer would need to satisfy several requirements:

a. One-Time Use

An issuer and its affiliates may rely on the Startup Exemption only once with respect to the same subject crypto asset (or a substantially similar crypto asset). The SEC requests comment on whether the “one-time use” condition would be unduly restrictive. The Commission suggests that “two crypto assets would be substantially similar if they have different names but the crypto asset and the associated crypto network or associated crypto application are functionally identical.”¹³ Commenters should also consider seeking guidance on the application of the “substantially similar” test and what it means to be “functionally identical.”

b. Filing Requirements

To rely on the Startup Exemption, an issuer would need to file a notice of reliance (Form NOR). Form NOR would require certain basic information, such as the name and address of the issuer. The issuer would also need to certify that it intends to fulfill its representations or promises within four years. The SEC requests comment on whether the required certification will “help to ensure that the exemption is being used for its intended purposes.”¹⁴ The SEC also asks whether a standard other than “intent” may be more appropriate. For instance, an issuer could simply certify that it is aware of the four-year time limitation. At the end of four years, the issuer would be required to file a transition report (Form TR) to notify investors and the SEC that the issuer is no longer relying on the Startup Exemption.

c. Disclosure

The issuer would be required to make the principles-based disclosures described above available at a website address specified in Form NOR. The disclosures would need to be publicly accessible and free of charge. In addition, the issuer would be required to amend the disclosures within 30 calendar days after the end of each calendar year if, as of the end of the calendar year, there are any material changes in the information previously disclosed.

III. The Fundraising Exemption (Subpart C)

Separately, Regulation Crypto Assets would include a new Fundraising Exemption modeled on Regulation A of the Securities Act. The Fundraising Exemption is intended to support larger offerings than those covered by the Startup Exemption, and it would also impose more burdensome compliance requirements on issuers. As with the Startup Exemption, issuers that rely on the Fundraising Exemption would remain subject to the anti-fraud and anti-manipulation provisions of the federal securities laws, including but not limited to Section 17 of the Securities Act and Section 10 of the Exchange Act.

a. Scope of the Offering 

Offering Limits. The Fundraising Exemption would be divided into two tiers. Tier 1 would exempt one or more offerings of up to $20 million in the aggregate in any 12-month period, including not more than $6 million by affiliated selling securityholders. Tier 2 would exempt one or more offerings of up to $75 million in the aggregate in any 12-month period, including not more than $22.5 million by affiliated selling securityholders. The offering limits would be adjusted for inflation. For purposes of the Tier 1 and Tier 2 offering limits, securities sold by an issuer and securities sold by its affiliates would be aggregated together. When an issuer first sells securities under the Fundraising Exemption, the portion of the aggregate offering price attributable to the securities of selling securityholders may not exceed 30 percent of the aggregate offering price. In calculating the 30 percent limitation, issuers also must consider any subsequent offering qualified within one year of the issuer’s first offering. 

Issuer Eligibility Criteria. Issuers would be required to meet certain eligibility criteria to rely on the Fundraising Exemption. An issuer would need to be organized in the United States and satisfy certain additional requirements borrowed from the definition of “foreign private issuer” in Exchange Act Rule 3b–4:

1. a majority of the issuer’s executive officers or directors are US citizens or residents, 
2. more than 50 percent of the issuer’s assets are located in the United States, and
3. the issuer’s business is administered principally in the United States.¹⁵

The Fundraising Exemption would not be available to development stage companies with no specific business plan or purpose, registered investment companies, business development companies or issuers that have been subject to an order of the Commission entered under Section 12(j) of the Exchange Act within five years before the filing of an offering statement.¹⁶

Offers and sales. As with Regulation A, offers would generally be prohibited prior to the filing of an offering statement. However, issuers would be permitted to engage in “test the waters” communications that satisfy certain disclosure and other requirements. Sales to purchasers that are not accredited investors would be permitted only if the aggregate purchase price is no more than 10 percent of the annual income or net worth of the purchaser (if the purchaser is a natural person) or 10 percent of the revenue or net assets for such person’s most recently completed fiscal year end (if the purchaser is not a natural person). Offers and sales of Covered Investment Contracts would be subject to offering circular delivery requirements, as under Regulation A. 

Continuous or Delayed Offerings. The Fundraising Exemption would permit certain continuous and delayed offerings. The SEC also requests comment on whether “token shelf” or at-the-market offerings should be permitted. 

b. Offering Statement

Like Regulation A, the Fundraising Exemption would require an issuer to file an offering statement on EDGAR (Form 1-CRYPTO), and the SEC would need to “qualify” the offering statement for the issuer to sell Covered Investment Contracts to investors. Issuers would be permitted to submit draft offering statements for nonpublic review. Form 1-CRYPTO would consist of three parts: (i) an XML-based fillable form with information about the issuer and offering, (ii) an offering circular and (iii) certain exhibits.¹⁷ The offering circular would include the principles-based disclosures described above, along with a narrative discussion of the issuer’s financial condition and financial statements. A key difference between Tier 1 and Tier 2 offerings is that for Tier 2 offerings, financial statements must be audited. The proposing release requests comment on alternatives to and the costs and benefits of the proposed financial statement requirements.

The exhibit requirements would be largely consistent with the exhibit requirements under Regulation A, but there are some differences. For one, Regulation Crypto Assets would require “an opinion of counsel as to the legality of the securities covered by the offering statement, indicating whether they will be binding obligations of the issuer.”

c. Ongoing Reporting

Issuers that have qualified Tier 1 and Tier 2 offerings under the Fundraising Exemption would be subject to ongoing periodic reporting requirements. Specifically, issuers would be required to file semiannual, annual and current reports. Periodic reports would be modeled on analogous Regulation A periodic reports but would be tailored to Covered Investment Contract offerings, much like the initial offering statement.

IV. The Investment Contract Safe Harbor (Subpart D)

Proposed Rule 400 would provide that a Covered Investment Contract will be deemed to have ceased to exist under the Securities Act and the Exchange Act if two conditions are satisfied. First, the issuer must complete or otherwise permanently cease all essential managerial efforts that it represented or promised it would engage in and must not make or intend to make any new representations or promises to engage in essential managerial efforts with respect to the underlying crypto asset.¹⁸ Second, the issuer must file a transition report (i.e., Form TR, the same form used to satisfy the transition report requirement under the Startup Exemption) with the SEC. In Form TR, the issuer would need to include an analysis to support its determination that the Covered Investment Contract has ceased to exist. 

If adopted, the investment contract safe harbor would be a major step toward providing durable rules defining the application of the investment contract analysis to crypto assets; however, issuers should be aware of the limitations of the safe harbor. While the safe harbor would control with respect to the SEC’s administration of the federal securities laws, the proposing release notes that “other parties” could still assert that a crypto asset is subject to an investment contract.¹⁹ Presumably, the Commission is referring to private litigants. In addition, even after an issuer has filed Form TR, the SEC could later challenge an issuer’s determination that it has satisfied the conditions of the safe harbor, including that it “cease[d] all essential managerial efforts that it represented or promised it would engage in.” 

The Commission considered and ultimately rejected a condition to the safe harbor that would have required a crypto asset to have sufficient functionality and the associated crypto network or associated crypto application to become sufficiently decentralized.²⁰ While there is no express decentralization requirement in the investment contract safe harbor, both the March Interpretation and the Regulation Crypto Assets proposing release acknowledge that issuers frequently make promises and representations regarding future decentralization as part of a Covered Investment Contract. To support its determination that it has “cease[d] all essential managerial efforts that it represented or promised it would engage in,” an issuer may need to establish that it has achieved the level of decentralization it promised to achieve, or that it has abandoned its “essential managerial efforts.” The March Interpretation notes that “if the issuer represents or promises to achieve decentralization of an associated crypto system, whether the issuer has achieved decentralization would be based on how the issuer defined or otherwise described decentralization, not a general market conception of what constitutes decentralization.”²¹ Issuers should consider the legal implications of any communications to investors regarding plans for decentralization because the application of the securities laws could turn on whether they accomplish the level of decentralization they promised to pursue. Commenters may also seek guidance on the circumstances under which a crypto project may reach a level of decentralization, such that the “managerial efforts” of an issuer are no longer “essential,” even if they continue.

Note also that Rule 400 would only address the meaning of “investment contract” in the definition of “security” under the Securities Act and the Exchange Act. It would not address other instruments listed in the definition of “security” (such as stocks and notes) or the meaning of “investment contract” in the definition of “security” under the Investment Company Act of 1940 or the Investment Advisers Act of 1940. Thus, issuers, intermediaries and market participants should analyze whether their activities with respect to Covered Investment Contracts trigger compliance requirements under securities-related statutes other than the Securities Act and the Exchange Act.

V. Preemption of State Law (Subpart E)

Lastly, Regulation Crypto Assets would preempt certain state blue-sky laws. Section 18(a) of the Securities Act provides that states may not require registration or qualification of “covered securities.” Section 18(b)(3) further provides that a security is a covered security with respect to the offer or sale of the security to “qualified purchasers.” Proposed Rule 500 would define “qualified purchaser” to include any person to whom securities are offered or sold under either the Startup Exemption or the Fundraising Exemption. Rule 500 would also preempt state law registration and qualification requirements with respect to secondary market transactions in Covered Investment Contracts so long as (i) the issuer satisfies either the Startup Exemption or the Fundraising Exemption with respect to the Covered Investment Contract and (ii) the issuer remains subject to and is current with respect to disclosure and filing obligations. 

While Regulation Crypto Assets would preempt state registration and qualification requirements with respect to primary and secondary market transactions, it would not address state registration requirements for broker-dealers and other intermediaries in transactions involving Covered Investment Contracts. As noted above, Regulation Crypto Assets also would not address the federal registration requirements for intermediaries.

VI. Conclusion

If adopted, proposed Regulation Crypto Assets would be a significant development in crypto regulation. For years, crypto market participants have sought an exemption from Securities Act registration requirements tailored to crypto markets. In many respects, the proposal would provide much-needed clarity and flexibility in how the federal securities laws apply to these markets. Issuers could sell Covered Investment Contracts to the public to raise money to fund their projects. Securities sold pursuant to Regulation Crypto Assets would not be restricted securities. There would be greater certainty with respect to the termination of Covered Investment Contracts, and the regulation would preempt certain state securities laws.

At the same time, the proposal comes with some limitations and potential compliance costs. The specifics of these exemptions will be shaped by the record developed during the comment period, giving the industry a meaningful opportunity to influence the final framework. Issuers, market participants and intermediaries should carefully review the proposal and consider submitting comments and engaging with the SEC and its staff.