The US Securities and Exchange Commission proposed on August 18, 2026 a roughly 400-page rulemaking that would create the agency's first standalone offering framework for crypto assets, allowing issuers to raise up to $75 million annually under a new "fundraising exemption."

The proposal, titled "Regulation Crypto Assets," was published in the Federal Register on August 21, 2026. Public comments are due by October 20, 2026, and the SEC has signaled that final rules would not arrive before the first quarter of 2027. The release contains more than 150 discrete requests for comment.

What does the proposal actually cover?

The rulemaking formalizes the interpretive framework from SEC v. W.J. Howey Co. for crypto assets that are not themselves securities. It regulates a particular contractual arrangement — the "covered investment contract" — rather than the underlying token, according to the proposing release. The release states the principle directly: the security is the covered investment contract, not the crypto asset itself.

A covered investment contract requires that a crypto asset is subject to the contract, the asset is not itself a security, and no other asset is subject to the contract. Tokenized stocks, bonds, and fund interests fall outside the framework entirely.

How would the two exemptions work?

The proposal creates a "startup exemption" permitting issuers to raise up to $5 million over four years without SEC review or audited financial statements. Retail investors may participate without individual investment caps. Issuers must file a notice of reliance on Form NOR and publish narrative disclosures under proposed Rule 103 on a website.

The larger "fundraising exemption" operates in two tiers modeled on Regulation A. Tier 1 allows raises of up to $20 million per 12 months, with unaudited US GAAP financial statements. Tier 2 permits raises of up to $75 million per 12 months, with audited statements under US GAAS or PCAOB standards.

The fundraising exemption is restricted to entities organized in the United States that meet a US-nexus test: a majority of executive officers or directors must be US citizens or residents, more than 50% of assets must be located in the US, and the business must be administered principally in the United States. Most offshore foundation structures common in token projects would not qualify as proposed.

What is the Form TR "off-ramp"?

Proposed Rule 400 establishes a safe harbor under which an issuer can file Form TR certifying that it has completed or permanently ceased all essential managerial efforts promised to investors. Once filed, the SEC will treat the covered investment contract as having ceased to exist.

The safe harbor is open to any issuer, including for tokens sold before the rules are adopted. Its effect, however, is prospective only: it does not cure an earlier unregistered offering, and antifraud liability survives the filing. The proposal specifies no process or timeline for an SEC challenge, and intermediary reliance on a filed Form TR receives no express protection.

What does this mean for state law and trading venues?

A new "qualified purchaser" definition under Section 18(b)(3) of the Securities Act would preempt state securities registration and qualification requirements for offerings under either exemption and for qualifying secondary market transactions. The DC Circuit upheld an analogous structure for Regulation A Tier 2 in Lindeen v. SEC.

The proposal leaves open whether trading venues facilitating secondary trading in covered investment contracts must register as exchanges, broker-dealers, or alternative trading systems under the Exchange Act. The SEC states only that it "will continue to consider whether further action with respect to covered investment contracts beyond the proposed rules in this release is warranted."

What happens next?

The rulemaking arrives against a stalled congressional track. The Digital Asset Market Clarity Act failed a cloture motion on September 15, 2026, by a 49-to-50 vote, well short of the 60 required. The CFTC has indicated it will proceed with market-structure rulemakings under its existing authority.

Regulation Crypto Assets now stands as the primary federal vehicle for offering-side clarity in crypto. The durability of its safe harbor will hinge on judicial review: under Loper Bright, a reviewing court owes the Commission's construction of "investment contract" no binding deference. The shape of any final rule will turn on the record that emerges before the October 20, 2026 comment deadline.