The SEC Wants to Let Token Issuers Raise $75 Million…

The U.S. Securities and Exchange Commission (SEC) has published the crypto offering framework the industry has wanted for the better part of a decade, and the clock on it is now running. On August 18, the SEC proposed Regulation Crypto Assets, a bespoke regime that would let token issuers raise up to $75 million without registering, and, more consequentially, would let a crypto asset stop being treated as the subject of an “investment contract” at all. The comment period closes October 20, 2026.

This is an analysis of a proposal, not a breaking development. FinanceFeeds previewed the rulemaking on August 13 ahead of a Commission meeting that was scheduled for August 14, then cancelled; the proposal instead landed by written vote on August 18, without the usual open meeting. What matters now is the substance, which is more far-reaching than the process stumble suggested, and the 60-day window in which the rules can still change.

What the SEC Actually Proposed

Regulation Crypto Assets, which runs 402 pages and would add a new Part 228 to the federal securities rules, does not regulate crypto assets as such. It governs a particular thing: the “investment contract” that a token is often sold under. The proposal builds on the SEC’s March 2026 interpretation, which took the position that a crypto asset can be sold subject to an investment contract at issuance and later cease to be one once the issuer’s promised managerial efforts are done. This proposal writes the rules for how that happens.

At its center are two new exemptions from Securities Act registration. The first is a one-time “startup exemption” for offerings up to $5 million over a four-year period. The second is a “fundraising exemption” for up to $75 million in each 12-month period. Both require issuers to make principles-based narrative disclosures, the kind of information token buyers actually use, such as governance, token supply and allocation, and lockup schedules, rather than the standard corporate financial forms.

The larger exemption carries heavier duties: issuers relying on the $75 million path must also provide financial statements and submit to ongoing reporting. Under both, the antifraud and antimanipulation provisions of the securities laws still apply in full, a point Commissioner Hester Peirce emphasized in her supporting statement.

Investor Takeaway

The Safe Harbor: How a Token Stops Being an “Investment Contract”

The exemptions are useful, but the provision that crypto lawyers have wanted since the 2018 debates over when a token is a security is the safe harbor. It would let a crypto asset be formally delinked from the investment contract it was once sold under. Under the proposed conditions, drawn from the SEC’s own release and the Chairman’s statement, the asset is deemed no longer subject to an investment contract if the issuer has completed or permanently ceased all essential managerial efforts it represented or promised to undertake, does not intend to make new such representations, and makes a public filing certifying it meets the conditions with a supporting analysis.

The logic is that existing securities law never contemplated an instrument whose regulated status is designed to expire. A network that has genuinely decentralized, where no central team is still driving its value, does not fit the investment-contract model that applies at launch. The catch, as law firm analyses of the text have noted, is that the “essential managerial efforts” test is fact-intensive: detailed public representations about development milestones, funding, and timelines likely count as essential managerial efforts, which means the exit is neither automatic nor easy to certify. It is a pathway, not a switch.

State Preemption: The Fight This Starts

The most contested piece is the one that reaches beyond the SEC. The proposal would preempt state securities registration and qualification requirements for offerings made under either exemption, and it would extend to certain secondary-market transactions as well. It does this with a legal maneuver: defining “qualified purchaser” under Section 18 of the Securities Act so that these offerings become “covered securities,” which states cannot require to register.

That is the clause state regulators are likely to resist, because it strips their long-held blue-sky authority over these offerings. State securities regulators have historically guarded that authority as a front-line investor-protection tool, and a federal rule that overrides it for an entire asset class is the kind of change that invites organized opposition during the comment period and, potentially, in court. Notably, the resale preemption is tied to ongoing issuer compliance and can lapse, so it is not the clean, permanent shield a casual reader might assume. This is the section where the comments will be loudest.

The Comment Clock and What to Watch

Two things make this moment unusual. First, the proposal cleared a Commission that is now entirely Republican. Caroline Crenshaw, the SEC’s last Democrat and its most reliable crypto skeptic, departed in January 2026, and the proposal advanced by written vote from Chairman Paul Atkins and Commissioners Peirce and Uyeda with no dissent. That unanimity is why the framework is as sweeping as it is, and also why the checks on it will come from outside the building, from states, from commenters, and eventually from whatever future Commission inherits it.

Second, the Federal Register notice sets the deadline: comments are due on or before October 20, 2026. Nothing is final until the Commission votes again to adopt, and the proposal itself flags open questions it will “continue to consider,” including how these offerings interact with exchange, broker, and dealer registration, which this rule does not resolve. The proposal arrived the same week the SEC’s posture was on full display elsewhere in Washington, alongside the White House crypto meeting and the CFTC’s new advisory committee, part of a coordinated regulatory turn toward the industry.

Investor Takeaway