On August 18, 2026, the SEC proposed Regulation Crypto Assets, a tailored set of rules for certain investment contracts involving crypto assets (called “covered investment contracts”). The proposal aims to give crypto projects clearer, workable ways to raise capital in the U.S. while keeping core investor protections.
Two New Offering Exemptions
1. Startup Exemption
- Raise up to $5 million total over a four-year period.
- Aimed at early-stage projects.
- Requires principles-based disclosures (no audited financial statements).
- One-time use for the same (or substantially similar) crypto asset.
- No resale restrictions; general solicitation allowed.
2. Fundraising Exemption
- Raise up to $75 million in any 12-month period (with a lower $20 million Tier 1 option in some descriptions of the proposal).
- Requires more disclosure, including financial statements (audited for larger offerings) and ongoing reporting.
- Modeled in part on existing Regulation A.
- Also allows free trading of the tokens (no resale restrictions).
Both exemptions require the issuer to make specific narrative disclosures about the project, token, network, risks, and related topics. Antifraud rules continue to apply.
Investment Contract Safe Harbor (the “Off-Ramp”)
Once the issuer has completed (or permanently stopped) all the essential managerial efforts it promised and files a transition report certifying this, the crypto asset can exit the “investment contract” status. At that point it would no longer be treated as a security under the Securities Act or Exchange Act for purposes of that investment contract.
Other Key Points
- Applies only to investment contracts involving a crypto asset that is not itself a security (and no other assets are part of the contract). Traditional securities (equity, debt, etc.) stay under existing rules.
- State “blue sky” registration requirements would be preempted for offerings under these exemptions and for many secondary-market trades.
- Comments are due 60 days after publication in the Federal Register (currently listed as October 20, 2026).
Bottom Line
This is the SEC’s most significant step yet toward a crypto-specific, capital-raising framework. It offers early projects a lighter path and larger raises with a clearer process, plus a defined way for tokens to leave securities regulation once development is complete.
Projects planning raises in the next 12–24 months should review the proposal carefully and consider submitting comments.
If you have any questions about this article, please contact Joe Mannon at jmannon@vedder.com or any other Vedder attorney with whom you have worked.
