Melker Bengtsson
TL;DR
-
The SEC formally proposed Regulation Crypto yesterday, without an open meeting, after last week's cancellation
-
Startup exemption allows raising $5 million over four years, fundraising exemption up to $75 million per 12 months
-
A safe harbor lets tokens stop being treated as securities once the issuer's promises have been reached
-
It's open to public comment, and can be amended, before it's formalized as SEC rules
Yesterday, the SEC formally proposed Regulation Crypto. It’s been in the works for some time now, including a cancelled open meeting last week. Reg Crypto would create rules for fundraising with crypto. After last week's cancellation, the proposal came as a surprise yesterday. There was no open meeting.
The SEC is moving forward with crypto despite the CLARITY Act, the US crypto market structure bill awaiting a September 15 Senate vote, being stalled in the Senate.
The Three Main Parts and Who's Eligible
The proposal has three main parts: a startup exemption for startups that allows a one-time raise of up to $5 million over four years, a fundraising exemption that allows raising up to $75 million per 12 months and a safe harbor for tokens to stop being treated as a security once the issuer’s promises have been reached or work has permanently stopped on it.
To be eligible for the exemptions, the token cannot itself be equity, debt or tied to a security (tokenized stock). There’s also a proposed rule that prevents projects where issuers or insiders are sanctioned or otherwise seen as a bad actor from raising.
These eligibility criteria open the door for new L1s, networks and DeFi protocols to raise money to fund development. Something that’s practically been illegal for 9 years, since the SECs own DAO report started applying securities laws to ICOs.
Since the proposal has now been presented, it’s open to public comment for 60 days. After that comments will be taken into consideration, the proposal can be amended to accommodate them and, at that point, it can be voted on again to officially be SEC rules. SEC Paul Atkins commented on the development:
As we continue the Commission's efforts to provide clarity for crypto markets, and as Congress works to establish a lasting regulatory framework, Regulation Crypto Assets seeks to provide crypto asset entrepreneurs and market participants with clear pathways to raise capital under the federal securities laws.
Moving Away From Regulation by Enforcement
Work on Reg Crypto has been ongoing since March 2026 and aims to clarify how securities laws apply to crypto projects. It’s part of the new direction for the SEC, moving away from the Gensler-era regulation by enforcement strategy, and instead creating rules.
Digital asset interest groups in the US have been backing the proposal from the start and the news was well received by both the Blockchain Association and the Digital Chamber.
The following statement is attributed to Blockchain Association CEO @SummerMersinger after today’s release of Regulation Crypto Assets by @SECgov: https://t.co/5ck75DCD9g pic.twitter.com/4NMbbaU19N
— Blockchain Association (@BlockchainAssn) August 18, 2026
BREAKING 🚨 @SECGov released proposed rule "Regulation Crypto Assets," advancing what @SECPaulSAtkins announced at our DC Blockchain Summit. Key provisions incl: startup exemption, fundraising exemption, investment contract safe harbor, and State-law preemption. More:… pic.twitter.com/356fh727YV
— The Digital Chamber (@DigitalChamber) August 18, 2026
Now, this is just a proposed rule and it’s possible there are changes before it’s formalized as a rule, but it’s a good step for crypto in the US. Agency rules are good, but can be amended by the next administration, which is why the US needs CLARITY.
