SEC Proposes New Rule to Streamline Crypto Fundraising
The Securities and Exchange Commission (SEC) has put forth a new rule designed to ease fundraising for cryptocurrency companies by offering two exemptions from standard securities registration requirements. The proposal, dubbed “Regulation Crypto Assets,” outlines two distinct pathways for capital raising: one capped at $5 million every four years and another at $75 million annually. Additionally, it includes a safe harbor provision that could exclude certain crypto assets from the legal definition of a security.
Details of the Proposed Exemptions
Under the proposed framework, the smaller exemption allows for a one-time offering of up to $5 million over a four-year period. Companies utilizing this exemption would be required to provide investors with narrative disclosures about the offering in plain language, a departure from the detailed format typically found in full registration statements. The requirements for this smaller exemption are described as relatively informal.
The larger exemption permits companies to raise up to $75 million within any 12-month period. However, this option comes with more stringent obligations, including the submission of financial statements and ongoing reporting requirements for as long as the company continues to raise funds under this exemption.
Safe Harbor for Certain Crypto Assets
The proposed rules also introduce a conditional safe harbor that would remove specific crypto assets from the “investment contract” definition, a key component of both the Securities Act of 1933 and the Securities Exchange Act of 1934. If a project meets the stipulated conditions, primarily related to whether management has completed or permanently ceased the work promised to investors, the associated token would no longer be considered an investment contract and, consequently, not a security. SEC Chairman Paul Atkins stated that this change would take effect “once an issuer has completed or permanently ceased all essential managerial efforts” it committed to.
“Congress designed our securities laws to amplify – within specific guardrails – opportunities for entrepreneurs to innovate and build new products,” Atkins commented. “Advancing this regulatory framework is a key element in our strategy to advance the rule books for the modern era and another step by the Commission to onshore innovation in crypto asset markets for generations to come.”
Preemption of State Regulations and Broader Context
The proposed rule would also preempt state securities registration and qualification requirements for offerings conducted under either exemption, as well as certain secondary market sales.
This proposal builds upon the SEC’s interpretation from March 2026, which initially clarified the application of federal securities law to certain crypto assets and transactions. The announcement comes just one day before a White House meeting scheduled for August 19. Executives from prominent crypto firms including Ripple, Coinbase, Chainlink, Paradigm, Kalshi, and a16z are expected to attend this meeting with regulators, as previously reported.
President Donald Trump is reportedly expected to participate, and Chairman Atkins is also slated to attend, according to updates from journalist Eleanor Terrett. While some reports suggest that executives from traditional finance sectors might also be present, an official guest list has not been confirmed.
The timing of the SEC’s proposal and the upcoming White House meeting occurs as the CLARITY Act, a broader legislative effort to delineate authority between the SEC and the Commodity Futures Trading Commission (CFTC) over digital assets, remains stalled in the Senate. Lawmakers departed for their August recess without a vote on the bill, and Majority Leader John Thune has filed for cloture, setting a potential vote for September 15.
Disputes over ethics provisions, anti-money laundering rules, and proposals for stablecoin rewards for customers have contributed to the legislative delays. Banks, in particular, have reportedly lobbied against the stablecoin reward concept, fearing it could divert deposits from traditional financial systems.
The SEC will accept public comments on “Regulation Crypto Assets” for a period of 60 days following its publication in the Federal Register.
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