SEC proposes Regulation Crypto Assets with new capital-raising exemptions

The Securities and Exchange Commission proposed actual, tailored rules for crypto assets on August 18: “Regulation Crypto Assets” introduces specific exemptions for crypto projects raising capital, a conditional safe harbor for tokens that outgrow their “investment contract” classification, and a framework that could reshape how digital asset offerings work in the US.

What the rules actually say

The proposal creates two distinct fundraising pathways. The first allows entities to raise up to $5 million over a four-year window without going through full Securities Act registration. The second permits raises of up to $75 million annually, with financial statement disclosures and ongoing reporting requirements.

The conditional safe harbor would allow issuers to exit “investment contract” status once they stop exerting the essential managerial efforts that triggered securities classification in the first place.

SEC Chairman Paul S. Atkins framed the effort as creating “clear pathways to raise capital” while keeping investor protections intact. The proposal also covers certain secondary market transactions, which could reduce the incentive for projects to structure their offerings offshore to avoid US regulatory ambiguity.

Building on the taxonomy

This proposal builds on the SEC’s March 17 interpretive release, which established a five-part token taxonomy classifying crypto assets into categories including digital commodities and digital securities. That earlier release also clarified how the Howey test applies to specific crypto activities like airdrops and staking.

A 60-day public commentary period will follow the proposal’s publication in the Federal Register.

Why this matters for the market

The $5 million and $75 million fundraising caps give projects concrete thresholds to work with. The reporting requirements for larger raises bring crypto offerings closer to the disclosure standards that traditional finance investors expect. The safe harbor mechanism offers a defined path from “this is a security” to “this is not a security anymore.”

The scope of the proposal—covering both primary offerings and certain secondary transactions—addresses a persistent structural issue. Many crypto projects have structured their token sales through offshore entities specifically to avoid triggering US securities law. By creating workable domestic exemptions, the SEC is attempting to bring that activity back within its jurisdiction.