SEC Unveils ‘Regulation Crypto Assets’ Framework for Crypto Startups to Raise Money

The U.S. Securities and Exchange Commission has proposed “Regulation Crypto Assets,” a new framework designed to give certain crypto projects clearer pathways to raise capital under federal securities law.

The Commission approved the proposal through “seriatim” votes, meaning commissioners voted individually outside a public meeting. The proposal would create 2 tailored exemptions for investment contracts involving crypto assets.

The first would allow an issuer to raise up to $5 million over a 4-year period. The second would permit offerings of up to $75 million during any 12-month period. Both would require principles-based narrative disclosures for investors. The $5 million figure covers the entire 4-year period, rather than $5 million each year.

The larger exemption would also require financial statements and ongoing reporting. The federal securities laws' antifraud and antimanipulation provisions would continue to apply.

A Proposed Safe Harbor for Crypto Assets

Regulation Crypto Assets would also establish a conditional safe harbor addressing when a crypto asset can cease to fall within an investment contract.

Under the proposal, an issuer could eventually separate a crypto asset from the investment contract associated with it if it satisfies the safe harbor's conditions. The concept builds on the SEC and Commodity Futures Trading Commission's March 2026 joint interpretation, which explained how a crypto asset that is not itself a security can become subject to an investment contract and how that relationship can end.

The March interpretation also created a taxonomy covering digital commodities, digital collectibles, digital tools, stablecoins and digital securities, while addressing areas such as airdrops, protocol mining, staking and wrapping.

Atkins Frames Proposal as Capital Formation Overhaul

SEC Chairman Paul Atkins described the proposal as an effort to answer a long-running question for crypto entrepreneurs: how can a team raise capital to develop a network while that network remains under construction?

Atkins emphasized that the Commission supports Congress's work on the Digital Asset Market Clarity Act, but argued that the SEC can act under its existing statutory authority while lawmakers continue negotiations.

He also said the framework could help reduce incentives for crypto companies to move offshore and make the United States a more attractive location for crypto development.

Commissioner Hester Peirce similarly backed the proposal, describing it as a step toward rules that developers can understand and follow. She highlighted the $5 million startup exemption, the $75 million fundraising exemption, and the conditional safe harbor as parts of a broader effort to create clearer crypto offering rules.

Peirce also warned that the framework will not fit every business model and urged the public to submit comments during the 60-day comment period.

Proposal Arrives as CLARITY Act Stalls

The SEC's action comes as Congress continues to debate the CLARITY Act, which would establish a broader statutory framework for digital asset market structure.

The Senate failed to advance the legislation before its August recess, leaving the SEC to move forward with regulatory changes while lawmakers remain deadlocked. Senator Cynthia Lummis has indicated that the Senate will vote on the legislation on September 15, when lawmakers return.

The political uncertainty has weakened expectations for passage. Polymarket currently places the probability of crypto market structure legislation becoming law in 2026 at 21%, down from 80% in January.

The SEC's move also follows the agency's decision to postpone an August 14 meeting scheduled to consider crypto-related rule proposals. The Commission ultimately advanced Regulation Crypto Assets on August 18.

President Donald Trump is also expected to meet with leaders from crypto, prediction markets, artificial intelligence and traditional finance at the White House today, August 19. SEC Chairman Atkins and CFTC Acting Chairman Michael Selig are expected to attend.

The SEC will accept public comments for 60 days after the proposal appears in the Federal Register.

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