The U.S. Securities and Exchange Commission has proposed one of its most significant crypto-specific regulatory frameworks to date, creating new pathways for blockchain projects to raise capital through token offerings without relying on traditional securities registration.
The proposal, formally titled “Regulation Crypto Assets,” would establish two new exemptions for certain investment contracts involving crypto assets. One would allow early-stage projects to raise up to $5 million over a four-year period, while a second would permit larger projects to raise up to $75 million during any 12-month period.
The framework would also create a conditional safe harbor that could eventually allow qualifying crypto assets to separate from the investment-contract regime once the issuer completes or permanently ends the essential managerial efforts it promised investors.
The proposal is not yet law. It will go through a public comment process before the SEC decides whether to modify, withdraw or adopt the rules. (SEC)
A New Capital-Raising Framework for Crypto
For years, U.S. crypto projects have faced a difficult fundraising environment.
Token issuers have generally had to determine whether their offerings fall within federal securities laws and, if so, either register with the SEC or rely on existing exemptions such as Regulation D or Regulation A.
The SEC’s proposed Regulation Crypto Assets would create a framework specifically designed for crypto projects and investment contracts involving non-security crypto assets.
Under the proposal, the underlying crypto asset itself would not necessarily be treated as the security. Instead, the regulatory focus would be placed on the investment contract through which the asset is offered and sold.
The SEC says the objective is to facilitate capital formation and innovation while giving investors information needed to make informed decisions.
Startups Could Raise Up to $5 Million
The first pathway is a startup exemption designed for early-stage crypto projects.
Qualifying issuers would be able to conduct offerings of up to $5 million over a four-year period without completing a full Securities Act registration.
The exemption would come with a tailored, principles-based disclosure regime rather than the extensive requirements associated with a traditional registered securities offering.
Projects would need to provide investors with information about the investment contract, the underlying crypto asset and the associated network or application.
The four-year period is significant because it effectively gives projects a defined regulatory runway to develop their networks before they are expected to operate under a different regulatory framework.
The proposal is therefore closer to a structured path for building a crypto network than a blanket exemption from securities laws.
Larger Projects Could Raise $75 Million
The second pathway is designed for more mature crypto projects.
Under the proposed fundraising exemption, qualifying issuers could raise as much as $75 million during any 12-month period.
That would put the framework in a different category from the startup exemption and potentially provide a U.S.-based fundraising alternative for crypto companies that have moved beyond the earliest development stage.
However, the larger exemption would carry additional disclosure requirements. Issuers would be required to provide financial statements and comply with ongoing reporting obligations.
The SEC’s proposal also contemplates allowing securities sold under these exemptions to reach an unlimited number of non-accredited investors, meaning the framework could substantially expand retail participation compared with traditional private-market fundraising structures. The securities would also generally not be treated as restricted securities under federal securities laws.
That could be one of the most consequential aspects of the proposal.
Instead of restricting token fundraising primarily to wealthy or institutional investors, qualifying projects could potentially reach a much broader investor base.
A Potential Return of Public Token Fundraising
If adopted, the framework could create the closest U.S. regulatory equivalent yet to the token fundraising models that emerged during the initial ICO boom.
The difference would be compliance.
The proposal does not simply reopen the door to unrestricted ICOs. Instead, it establishes defined offering limits, disclosure requirements, eligibility conditions and investor protections.
That distinction is important.
The SEC is effectively attempting to create a regulated pathway through which blockchain projects can distribute tokens to the public while remaining within a federal securities framework.
For startups, this could reduce the need to establish complicated offshore structures solely to distribute tokens.
For investors, it could provide access to token offerings accompanied by standardized disclosures that are currently unavailable across much of the market.
Tokens Could Eventually Leave the Securities Framework
Perhaps the most important element of the proposal is not the fundraising exemptions at all.
It is the proposed investment-contract safe harbor.
The SEC is proposing a framework for determining when a crypto asset that was initially sold as part of an investment contract can eventually cease to be subject to that investment contract.
Under the proposed approach, qualifying tokens could potentially exit the investment-contract framework when the issuer has completed, or permanently ceased, the essential managerial efforts that were represented or promised to investors.
This addresses one of the industry’s longest-running regulatory problems.
A project may initially depend heavily on its development team to build a network. Investors may therefore reasonably expect the team’s continued efforts to contribute to the token’s value.
But if the network eventually becomes operational and the issuer’s promised managerial role ends, the economic and legal relationship between the token and the issuer can change.
The SEC’s proposal attempts to establish a clearer rule for that transition rather than leaving every project to determine its status through litigation or case-by-case enforcement.
The Proposal Separates the Token From the Investment Contract
The distinction is crucial.
Under the proposed framework, a crypto asset can be associated with an investment contract without necessarily being a security in itself.
The SEC defines a proposed “covered investment contract” as an investment contract involving a crypto asset that is not itself a security and does not include other assets within the investment contract.
This creates a regulatory structure in which the sale arrangement can be regulated as a security while the underlying token may ultimately operate outside the securities definition once the relevant conditions are satisfied.
That approach could become particularly important for blockchain networks designed to become increasingly decentralized over time.
The Proposal Could Change Retail Crypto Investing
The retail implications could be significant.
Traditional private fundraising often limits access to accredited investors or imposes restrictions on how securities can subsequently be traded.
The SEC’s proposed crypto framework is designed differently.
The agency’s proposal says securities issued under the new exemptions would not be restricted securities, while the fundraising exemption would permit sales to an unlimited number of non-accredited investors.
That could make token-based capital formation substantially more accessible to ordinary investors, provided issuers meet the applicable requirements.
It could also create a new class of public-facing crypto fundraising markets in the United States.
Instead of investors waiting for a token to reach a secondary market after an offshore launch, eligible projects could potentially conduct compliant offerings domestically from the beginning.
This Is Not a New ICO Free-for-All
Despite the potential similarities to the ICO era, the proposed framework would still impose meaningful obligations.
Issuers would have to satisfy disclosure requirements and eligibility conditions. The larger fundraising exemption would require financial statements and continuing reports.
The SEC also proposes “bad actor” disqualification provisions that could prevent certain issuers and insiders from using the exemptions.
The agency’s objective appears to be creating a regulated middle ground between two extremes: forcing every crypto project into a traditional securities-registration framework or leaving token fundraising largely outside the U.S. regulatory system.
Regulation Crypto Assets Builds on the SEC’s 2026 Crypto Framework
The proposal follows the SEC’s March 2026 interpretation clarifying how federal securities laws apply to different categories of crypto assets and transactions.
That earlier framework established a more detailed taxonomy for crypto assets and clarified circumstances in which a non-security crypto asset can become subject to securities laws because it is offered or sold through an investment contract.
The new proposal builds on that foundation by addressing the practical question that follows classification:
If a crypto project is raising capital, how can it do so legally?
Regulation Crypto Assets attempts to provide a direct answer.
SEC Chairman Paul Atkins has described the broader regulatory agenda as an effort to modernize securities rules around crypto technology while maintaining investor protections.
A Major Shift for US Crypto Capital Formation
If ultimately adopted, the framework could fundamentally change how crypto companies raise money in the United States.
Early-stage projects could receive a four-year regulatory runway and raise up to $5 million.
More established projects could potentially raise as much as $75 million annually under a broader disclosure framework.
Retail investors could gain access to qualifying offerings without the traditional accredited-investor restrictions that dominate much of private-market fundraising.
And projects could eventually have a defined regulatory pathway for their tokens to separate from an investment contract once the issuer’s essential managerial obligations have been completed or permanently abandoned.
The proposal therefore goes beyond simply making token sales easier.
It attempts to create an entire life cycle for crypto capital formation: raise capital, develop the network, provide disclosures, reach maturity and potentially allow the token to operate outside the investment-contract framework.
The Rules Are Not Yet Final
Despite the scale of the proposal, crypto companies cannot begin relying on these exemptions immediately.
The SEC’s Regulation Crypto Assets framework remains a proposal and must go through the agency’s rulemaking process. A 60-day public comment period will follow publication in the Federal Register, after which the SEC can revise the framework before deciding whether to adopt it.
That means the final rules could look different from the current proposal.
Questions around investor protections, offering limits, disclosure requirements, decentralization and the conditions for exiting the investment-contract framework are likely to attract significant attention during the comment process.
The proposal also does not eliminate the need for broader congressional legislation. The SEC has previously emphasized that comprehensive crypto market-structure legislation would provide a more durable foundation for the industry.
Nevertheless, the direction is unmistakable.
After years in which U.S. token fundraising was largely defined by enforcement risk and regulatory uncertainty, the SEC is now proposing a formal framework for how crypto projects can raise capital, reach retail investors and potentially graduate out of the securities regime.
If adopted substantially as proposed, Regulation Crypto Assets could mark the beginning of a new era for U.S. token markets, one in which ICO-style fundraising returns not as an unregulated experiment, but as a regulated component of America’s digital-asset capital markets.
