The U.S. Securities and Exchange Commission has proposed two registration exemptions, including a $75 million annual pathway, under its new Reg Crypto framework for certain crypto investment contracts.
Summary
- The larger exemption would allow qualifying issuers to raise up to $75 million in 12 months.
- A separate pathway would permit offerings of up to $5 million across four years.
- The proposal includes a conditional safe harbor and disclosure requirements for participating issuers.
- Stakeholders will have 60 days to submit comments on the proposed framework.
SEC Reg Crypto rules create two offering exemptions
The SEC said in an Aug. 18 press release that Regulation Crypto Assets would establish a tailored framework for certain investment contracts involving digital assets. The proposal follows the Commission’s March 2026 interpretation of how federal securities laws apply to crypto assets and related transactions.
Under the first exemption, an eligible issuer could offer up to $5 million in crypto investment contracts during a four-year period without completing the standard registration process under the Securities Act of 1933. The pathway would provide smaller projects with a route to raise capital while remaining subject to the framework’s conditions.
A second exemption would cover offerings of up to $75 million during any 12-month period. Issuers using the larger pathway would face extra obligations, including financial statement requirements and continued reporting after an offering.
Both routes would require issuers to provide investors with narrative disclosures based on principles specified in the proposed rules. Describing the common requirement, the Commission said issuers would need to make “certain principles-based narrative disclosures” available to their investors.
The SEC has not presented either exemption as an automatic exclusion for all token sales. Each route applies to qualifying crypto investment contracts and depends on compliance with the conditions set out in the proposal. The release does not suggest that every crypto asset or transaction would become exempt from federal securities law.
Before the proposal emerged, the Commission had scheduled an Aug. 14 open meeting to consider the offering framework. The agency later canceled the meeting because of what it called an unforeseen scheduling issue and did not immediately provide a replacement date.
As crypto.news previously reported, the rulemaking package had already entered the White House review process under RIN 3235-AN38 before the meeting was canceled. Its publication now moves the plan into the public rulemaking process rather than putting the exemptions into immediate effect.
Conditional safe harbor could change token treatment
Alongside the two offering exemptions, Reg Crypto proposes a conditional safe harbor from the term “investment contract” within the definitions of a security under the Securities Act of 1933 and the Securities Exchange Act of 1934.
Under the proposal, a crypto asset initially connected to an investment contract could cease to receive that treatment when the arrangement satisfies the safe harbor’s conditions. The framework therefore addresses the legal agreement surrounding a token rather than treating the asset as permanently tied to one securities classification.
The approach follows the SEC’s March interpretation, which addressed when a crypto asset may be sold as part of an investment contract and when that contractual relationship may end. Earlier coverage of the interpretation noted that the SEC and Commodity Futures Trading Commission presented the guidance as a complement to congressional work, not a replacement for legislation.
For U.S. token issuers, the distinction affects how projects could structure fundraising and later transactions. Investors would also receive different levels of information depending on which exemption the issuer uses, with the $75 million pathway carrying financial statements and ongoing reports.
The Commission further proposed overriding state registration and qualification requirements for offers and sales covered by the exemptions. According to the release, the preemption would also reach certain secondary-market transactions that meet the framework’s requirements.
Such federal preemption would reduce the need for qualifying issuers to complete separate securities registration processes in individual states. The proposal would not, however, remove every state-level rule that could apply to a project, because its stated preemption concerns registration and qualification requirements for covered transactions.
SEC rules cannot replace the CLARITY Act
Reg Crypto arrives while the Digital Asset Market Clarity Act remains pending in the Senate. The two measures cover overlapping parts of U.S. crypto policy but rely on different legal routes and do not have the same scope.
Using its existing authority, the SEC can set exemptions and reporting conditions for investment contracts governed by federal securities laws. Congress would have to change the statutory division of authority between the SEC and CFTC or establish a complete market structure regime for digital assets.
The CLARITY Act would address that division by defining categories of digital assets and assigning oversight between the two regulators. Reg Crypto concentrates on securities offerings, issuer disclosures, and the circumstances under which an investment-contract relationship may end.
Recent CLARITY Act coverage reported that the Senate left for its August recess without holding a floor vote. Senate Majority Leader John Thune filed cloture before the break, leaving the chamber to consider the procedural motion after lawmakers return.
The House passed its version of the legislation by a 294–134 vote in July 2025. In the Senate, the measure needs 60 votes to overcome a filibuster before lawmakers can proceed to the remaining stages of consideration.
Reg Crypto would not settle every issue covered by the bill, including the full boundary between securities and commodities oversight or a federal framework for spot crypto trading. The SEC proposal instead provides an agency-led route for a narrower group of transactions while the congressional process remains unfinished.
Public comment will shape the final SEC framework
Stakeholders will have 60 days to comment on Reg Crypto after the proposal enters the prescribed publication process. Issuers, investors, trading platforms, legal professionals, and other members of the public may submit responses addressing the exemptions, disclosures, and safe-harbor conditions.
The proposed rules are not yet final and do not immediately change the registration duties of crypto issuers. After reviewing the submissions, the SEC may revise the text before deciding whether to adopt a final version.
Separately, the Commission has been developing an Innovation Exemption for tokenized securities and onchain trading. White House meeting coverage cited Galaxy Digital research head Alex Thorn as saying he expected the SEC to publish Reg Crypto, the Innovation Exemption, or both within weeks, regardless of the CLARITY Act’s outcome.
The Innovation Exemption would require its own regulatory process and is not part of the two fundraising exemptions announced under Reg Crypto. The SEC has not included a final implementation date for that separate framework in the Reg Crypto release.
