SEC proposes crypto offering rules, and a certified way out of them

What happened

The Securities and Exchange Commission proposed new rules titled Regulation Crypto Assets on 18 August 2026, in a 402 page release numbered 33-11434 and 34-106150 under file number S7-2026-27 and regulation identifier 3235-AN38, amending parts 200, 201, 228, 230, 232 and 239 of title 17 of the Code of Federal Regulations. It was not proposed at an open meeting: the Commission cancelled the meeting called for 14 August the day before it was to sit, its meetings page carries no rescheduled sitting, and the next Commission events listed are a closed meeting on 20 August and a roundtable on 24-hour trading on 17 September. Chairman Paul S. Atkins said the proposal 'would also allow for a safe harbor once an issuer has completed or permanently ceased all essential managerial efforts that it represented or promised it would take under an investment contract' and called advancing the framework 'another step by the Commission to onshore innovation in crypto asset markets for generations to come'. Commissioners Hester M. Peirce and Mark T. Uyeda published statements of their own the same day; no dissenting statement appears on the Commission's statements index. The rules would apply to a 'covered investment contract', defined as an investment contract to which a crypto asset that is not itself a security is subject and to which no other asset is subject, and they build on the Commission's interpretation of 17 March 2026, cited in the proposing release as Release No. 33-11412 at 91 FR 13714 and described in Peirce's statement as an interpretation by the Commission and the Commodity Futures Trading Commission together. There are two exemptions from Securities Act registration. A one-time startup exemption would allow offerings of up to $5m over four years, with public filings at each end of the period and principles-based narrative disclosures made available to investors in between; the definition of covered transaction under it names airdrops in terms, so a free distribution sits inside the regime rather than outside it. A fundraising exemption modelled in part on Regulation A would allow up to $75m in each twelve-month period; the fact sheet sets it out in two tiers, $20m under Tier 1 and $75m under Tier 2, with audited financial statements required only for Tier 2, a division no report carried. A footnote to the definition of aggregate offering price says permitted payment stablecoins received for the contracts count towards the limit. A third subpart would create a conditional safe harbour from the term investment contract in the definitions of security in both the 1933 and 1934 Acts, perfected by the issuer filing a new Form TR certifying that it has completed or permanently ceased the essential managerial efforts it promised and attaching its own supporting analysis. A fourth would define qualified purchaser under section 18(b)(3) of the Securities Act so as to preempt state registration and qualification requirements for these offerings and for secondary transactions in them by anyone other than an issuer, underwriter or dealer. The release records that it is an economically significant action under section 3(f)(1) of Executive Order 12866 and has been reviewed by the Office of Management and Budget consistent with Executive Order 14215. Comments are due sixty days after publication in the Federal Register; the release still carries a bracketed placeholder for that date, and as of 09:00 UTC on 19 August the document appears neither in the Federal Register nor on its public inspection list.

Why it matters

The two exemptions are the part everyone reported and the least interesting part of the document. What the proposal actually redistributes is authority, and it does so in two directions at once. The safe harbour is a promise by one regulator about its own conduct: satisfy the conditions and the Commission 'would take the position in its administration of the Federal securities laws that the reporting, registration, and other requirements of the Federal securities laws no longer apply'. Then the release says plainly that the safe harbour 'would not prevent other parties from asserting that a crypto asset is subject to an investment contract (or is otherwise a security)', and that the Commission is not precluded from challenging a certification it thinks was wrong. Section 18(c) of the Securities Act, quoted in the preemption subpart, leaves the states their jurisdiction to investigate and bring actions for fraud or deceit. So an issuer who files a Form TR has a clearance that binds the federal securities regulator and binds nobody else: not a state attorney general, not a private plaintiff, not a court. This corpus has spent a month recording state actions against venues that hold federal permissions and the pattern is the same shape. Meanwhile the fourth subpart takes from the states the one thing the safe harbour does not touch, which is the power to require registration of the offering in the first place. The reasoning for that is candid and worth reading: the Commission says it expects issuers of these contracts to run offerings that are 'neither regional nor solely intrastate', quotes the President's Working Group on activity in digital asset markets being 'borderless', and cites a commenter for the proposition that any policy discussion about this technology 'must take account of its global phenomenology'. A borderless asset is offered as the reason a state may not ask to see the paperwork. The second thing to read carefully is what the safe harbour asks of nobody. There is no review, no staff comment process and no determination; Form TR requires the issuer's own certification and its own analysis, and the release's expectation is only that the analysis be clear enough that a reasonable investor could follow it. The Commission's own request for comment records the difficulty this creates from the other end, asking at question 134 whether firms will avoid the safe harbour altogether because relying on it 'may [be viewed] as requiring a tacit admission that the crypto asset previously was subject to an investment contract'. The third is scope. Commissioner Peirce's 2020 proposal, which Atkins credits as the origin of today's action, exempted tokens from Exchange Act registration and exempted persons dealing in them from the definitions of exchange, broker and dealer. Regulation Crypto Assets does none of that. It is an offering regime, and the words broker-dealer appear in it only inside a quotation from a comment letter. A token can now be certified out of the securities laws without any venue becoming lawful to trade it on, which is precisely the market structure gap the Clarity Act was meant to close and has not.

What is not settled

The comment deadline does not exist yet. Sixty days runs from Federal Register publication, the release carries a placeholder where that date should be, and the document was on neither the Federal Register nor its public inspection list on the morning after it was issued. The Commission does not know how many issuers the regime is for and says so: 'We do not have reliable data or information that would allow us to estimate the number of issuers that would be able to rely on the proposed rules or that are likely to use them in the future.' What it uses instead is initial coin offering counts from the last decade, one study finding 5,644 offerings globally between 2016 and 2018 of which about 17 per cent had US-based development teams, another finding 5,376 from 2013 to 2019 of which 13 per cent were in the United States, with the caveat that the peak of that activity was almost seven years ago. The detailed regulatory impact analysis is not in the release. Whether the preemption survives is unsettled and the release knows it, resting on the Commission's win in Lindeen v. SEC over the equivalent preemption for Regulation A Tier 2 offerings; no state has yet said anything. The chairman does not present the rules as durable, saying that legislation 'remains indispensable' to rules 'durable enough to protect the work we are undertaking today from being unwound by a future rogue regulator'. Peirce says the exemptions 'will not fit every model' and asks specifically for comment on 'facilitating the ability of crypto assets to serve a role akin to equity to enable token holders to share in the growth and value of the enterprise that builds a crypto network', which the proposal does not attempt and which is the question every protocol with actual revenue is already living. And the interpretation the safe harbour codifies is attributed differently by different documents on the same page of the same website: the proposing release and Atkins' statement cite it as Release No. 33-11412, a Commission release, while Peirce's statement describes it as an interpretation by the Commission and the CFTC.