SEC Continues Accepting Comments on Crypto Asset Regulation Proposal Despite Official Deadline
The U.S. Securities and Exchange Commission (SEC) is continuing to accept public feedback on its proposed “Regulation Crypto Assets” despite the official comment period having closed on October 20, 2026. The agency confirmed it would keep the channel open for submissions, even though no formal extension to the deadline was announced.
The proposal, filed under No. S7-2026-27, had garnered approximately 140 submissions by the October 20 deadline from a range of industry groups, companies, and individuals. Notable commenters include the Hyperliquid Policy Center, the Alternative Investment Management Association (AIMA), the Securities Industry and Financial Markets Association (SIFMA), and Anthony Scaramucci of SkyBridge Capital.
Key Concerns Emerge Over Airdrops and Safe Harbor Provisions
Several commenters, including the Hyperliquid Policy Center and SIFMA, have identified specific areas within the proposal that they believe require revision. The most significant points of contention appear to be the rule’s treatment of airdrops and the scope of the proposed safe harbor.
Airdrops, which are typically free distributions of tokens to a project’s users or community, present a complex challenge under existing securities law. Even when offered without charge, such distributions can raise intricate questions about the existence of an investment contract.
Framework Aims to Structure Crypto Asset Investment Contracts
The SEC initially unveiled the proposal on August 18, 2026, with the stated objective of establishing a structured framework for certain investment contracts involving crypto assets. The regulation seeks to create two primary exemptions under the Securities Act of 1933.
The first exemption is designed for startups, allowing crypto offerings to raise up to $5 million over a four-year period without undergoing full registration. The second exemption targets larger fundraising efforts, permitting raises of up to $75 million within a 12-month period, contingent upon issuers filing ongoing reports.
Safe Harbor and Legal Clarity for Secondary Markets
The proposal also introduces a conditional safe harbor intended to preempt certain state securities regulations for qualifying offerings. This provision would relieve issuers from navigating separate regulatory processes in each state, though federal antifraud laws would remain applicable. Furthermore, the framework aims to enhance legal clarity for the secondary trading of crypto securities.
This initiative builds upon guidance issued in March 2026 by the SEC and the Commodity Futures Trading Commission (CFTC), which provided a joint interpretation of how securities laws apply to crypto transactions.
Encouraging Innovation While Protecting Investors
SEC Chairman Paul Atkins has characterized the proposal as a means to foster capital formation and technological innovation while simultaneously safeguarding investor protections. The ongoing legislative efforts surrounding the CLARITY Act, which addresses crypto market structure, remain stalled in Congress, prompting the SEC to pursue regulatory avenues to achieve similar objectives.
The proposed $5 million startup exemption and the $75 million fundraising exemption are intended to provide clear growth pathways for crypto projects, with the latter demanding greater disclosure.
Potential Implications for Token Distribution and Regulatory Stability
Industry participants are closely watching how the final rule will address airdrops. A strict approach could render a common token distribution method legally precarious, while an overly lenient one might be perceived as a loophole around offering limits.
Without the backing of legislation like the CLARITY Act, the Regulation Crypto Assets framework could be subject to revision by future SEC administrations. This uncertainty could impact issuers planning multi-year fundraising efforts under the startup exemption.
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