On August 18, 2026, the U.S. Securities and Exchange Commission (the SEC or the “Commission”) proposed Regulation Crypto Assets, a new framework that would establish a “fit-for-purpose” regime for offering certain investment contracts involving crypto assets without registration under the Securities Act of 1933, as amended (the “Securities Act”). After nearly a decade in which the SEC regulated crypto assets primarily through informal guidance and enforcement, the proposal represents a significant shift: it would establish the Commission’s first bespoke crypto offering regime.
Regulation Crypto Assets is organized into five subparts. At a high level, it would establish:
Read the Commission’s proposal. Once published in the Federal Register, the proposal will be subject to a 60-day comment period, after which the Staff will review the comments received. The Commission may then consider whether to adopt a final rule, which could differ from the proposal.
Since its 2017 DAO Report, the Commission has generally approached crypto assets by applying the test developed by the Supreme Court of the United States in SEC v. W.J. Howey Co. (the “Howey test”) to determine whether a crypto asset, in the context in which it was being offered and sold, constituted or was subject to an “investment contract” and therefore fell within the purview of the federal securities laws. If the crypto asset constituted or was subject to an investment contract, the issuer of the investment contract was expected to comply with the existing federal securities laws.
However, as the crypto asset ecosystem developed, many argued that the test was difficult to apply with certainty and that compliance with the SEC’s existing rules and regulations was difficult to square with the unique characteristics of many crypto assets and blockchain-based platforms.
Beginning in 2025, the Commission’s posture shifted, with the establishment of the Crypto Task Force and a concerted effort by the Commission to engage with the broader crypto community. On March 17, 2026, the Commission issued a release titled “Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets” (the “2026 Interpretation”) (previously covered in this client alert). The 2026 Interpretation provided a taxonomy of crypto assets, described when secondary transactions of non-security digital assets may be part of an investment contract, and addressed recurring activities such as protocol mining, staking, wrapping, and certain airdrops. Most importantly, the 2026 Interpretation clarified that a crypto asset may be sold as part of an investment contract but may cease to be subject to one if reliance on managerial efforts dissipates.
The proposal builds on this separation concept and codifies it as a safe harbor.
Key to understanding the proposed regulation of crypto assets is understanding the SEC’s use of the term “investment contract.” As noted above, under the Howey test, regulation of a crypto asset turns on whether a crypto asset, in the context in which it is being offered and sold, constitutes or is subject to an investment contract. If the crypto asset constitutes or is subject to an investment contract, then the issuer of the investment contract must comply with the existing federal securities laws.
The 2026 Interpretation explained that, as with any asset that is not a security, a non-security crypto asset can be offered and sold subject to an investment contract, which is a security. With respect to how non-security crypto assets become subject to an investment contract, the 2026 Interpretation noted that how an issuer markets and promotes a contract, transaction, or scheme is relevant to assessing whether the issuer is offering or selling an investment contract and thus a security. Under such circumstances, both the issuer’s initial offer and sale of the non-security crypto asset as part of the investment contract and secondary-market offers and sales of the asset while the associated investment contract remains connected to it would constitute securities transactions that must be registered under the Securities Act or conducted pursuant to an available exemption from registration. The associated investment contract will continue to be transferred to subsequent purchasers of the non-security crypto asset in secondary market transactions until the non-security crypto asset separates from the issuer’s representations or promises.
With respect to how a non-security crypto asset that was previously offered and sold subject to an investment contract ceases to be subject to such investment contract, the 2026 Interpretation stated that for the non-security crypto asset to remain subject to the investment contract, purchasers must continue to reasonably expect the issuer’s representations or promises to engage in essential managerial efforts to remain connected to the non-security crypto asset. The 2026 Interpretation also stated that, when a purchaser of a non-security crypto asset that had been subject to an investment contract could no longer reasonably expect the issuer’s representations or promises to engage in essential managerial efforts to remain connected to the non-security crypto asset, the non-security crypto asset separates from such representations or promises, and thereafter the non-security crypto asset is not subject to the federal securities laws.
The proposed Regulation Crypto Assets codifies and expands on this concept.
Under the proposal, Regulation Crypto Assets would be set forth in part 228 of Title 17, Chapter II of the Code of Federal Regulations (CFR). The proposed rule would include new definitions and general instructions.
Regulation Crypto Assets would introduce a set of defined terms in new Rule 100. The central one is “covered investment contract,” meaning an investment contract in which a crypto asset is the only asset subject to the contract and the crypto asset is not itself a security. The underlying token would be defined separately as the “subject crypto asset.”
Building on those definitions, “covered transaction” defines the universe of offers, sales, and other distributions (expressly including airdrops and network rewards) that the startup exemption reaches, and “eligible securities” identifies the covered investment contracts that may be sold under the fundraising exemption, subject to its offering limits.
Yes. An issuer seeking to take advantage of the proposed exemptions (discussed below) would still be required to make substantial disclosure to investors. Rather than importing the traditional issuer-focused disclosure framework used for conventional offerings, however, issuers relying on the proposed exemptions would provide the principles-based disclosures required by proposed Rule 103. Of note, the description of the issuer’s promised “essential managerial efforts” may be particularly consequential because those disclosures could provide an important benchmark against which the issuer, purchasers, courts, and regulators later determine whether the investment contract has ceased to exist under Rule 400.
Rule 103(b) enumerates 10 disclosure topics:
Rule 103 also requires the information provided under the regime to be consistent with the issuer’s public statements in its established public communication channels, such as its website or official social-media accounts, and with promotional materials such as whitepapers. That requirement may make communications discipline particularly important for crypto issuers. For public companies with material crypto operations or exposure, the Rule 103 topics may also provide a useful reference point for risk factors and related digital-asset disclosure, even outside the new forms.
The proposal introduces a suite of new forms specific to Regulation Crypto Assets:
Form 1-CRYPTO uses Form 1-A as a model but is tailored to covered investment contracts. It has three parts:
Under Part F/S of Form 1-CRYPTO, issuers must provide U.S. GAAP financial statements—consolidated balance sheets and statements of comprehensive income, cash flows, and changes in stockholders’ equity—substantially as under Form 1-A. Assurance depends on the tier: Tier 1 offerings have no audit requirement (though if an issuer has obtained an audit, it must file the audit report), while Tier 2 offerings must include financial statements audited in accordance with U.S. GAAS or PCAOB standards by an independent auditor under Rule 2-01 of Regulation S-X. Given the size of Tier 2 offerings (up to $75 million), the Commission views this financial disclosure as important to investors.
Yes. Rule 104 makes the exemptions unavailable if the issuer or any person listed in Rule 262(a) would be subject to disqualification under Rule 262—the same “bad actor” framework used in Regulation A—subject to the exceptions in that rule.
No. Consistent with exemptions like Regulation A and Regulation D, the exemptions in Regulation Crypto Assets would be non-exclusive. An issuer could instead conduct a registered offering, rely on another available exemption, or (subject to the rules’ conditions) move between the startup and fundraising exemptions. The startup and fundraising exemptions are designed to work together over the life of a project rather than as mutually exclusive alternatives.
Subpart B would exempt certain offers, sales, and other distributions of covered investment contracts from the registration requirements of Section 5 of the Securities Act, for up to $5 million during a period of up to four years.
The proposal describes the exemption as providing temporary relief from registration during the window in which an issuer works toward fulfilling the essential managerial efforts it represented or promised to investors, while keeping investors informed through disclosure.
The operative rule, Rule 200, is organized into five paragraphs.
Rule 200(b) sets out six conditions:
Form NOR is the new notice-of-reliance form (to be codified at 17 CFR 239.605) that an issuer files publicly on EDGAR before any covered transaction. It requires basic issuer information (name(s), jurisdiction of organization, principal-office address, telephone, and email), the name of the subject crypto asset, the website address where the Rule 103 disclosures will be freely accessible, and a certification that the information is true, complete, and correct and that the issuer intends to fulfill, within four years, the essential managerial efforts it promised investors. An issuer may amend Form NOR at any time and must amend it to correct a material error or reflect a material change, until the earlier of the end of the four-year period or the filing of Form TR.
Under Rule 200(d), the issuer must make the Rule 103 information publicly accessible and free of charge at the website specified in the notice of reliance, at or before the time it files the notice, and must keep that information available until the earlier of the end of the four-year period or the filing of Form TR. If, as of the end of a calendar year, there have been material changes to the information previously disclosed, the issuer must update the disclosure within 30 calendar days after year-end. The Rule 103 information itself need not be filed on EDGAR under the startup exemption, which makes version control and recordkeeping important if questions later arise about what was publicly available at a particular time.
Rule 200(e) requires the issuer to file a transition report on Form TR (to be codified at 17 CFR 239.604) no later than four years after the notice of reliance. The transition report makes investors, the Commission, and the public aware that the issuer has ceased relying on the startup exemption. As discussed below, when the safe-harbor conditions are satisfied, Form TR also is the vehicle for perfecting reliance on the investment contract safe harbor, so the end of the startup period and the “separation” of the asset can be documented through the same filing.
Existing small-offering exemptions such as Regulation Crowdfunding and Regulation D were designed for conventional securities and were not built to accommodate token distributions, network effects, or non-cash “rewards.” The startup exemption is purpose-built for those features and, most notably, its “covered transaction” concept reaches airdrops and network rewards, not only capital-raising sales. Covered investment contracts sold under the exemption would not be restricted securities or otherwise subject to rule-based resale restrictions; general solicitation would be permitted; and the exemption would not impose an accredited-investor requirement or an individual investment limit. Because qualifying non-cash distributions can be covered transactions, issuers also would need to account for the value of non-cash consideration received when measuring the $5 million cap.
Subpart C would exempt offerings of up to $75 million of covered investment contracts in any 12-month period from Section 5 registration. It is modeled in large part on Regulation A and is structured in two tiers with separate offering limits. It is intended for issuers whose capital needs exceed what the startup exemption allows, and it carries correspondingly greater disclosure, financial-statement, and ongoing-reporting obligations. Because covered investment contracts are not “eligible securities” under Regulation A, issuers may not rely on Regulation A itself for these offerings.
Rule 300(a) sets the tier structure, which mirrors Regulation A’s offering limits:
For both tiers, amounts sold by the issuer and by its affiliates are aggregated to prevent circumvention of the limits, and a first-year restriction caps the portion of an offering attributable to selling securityholders at 30 percent of the aggregate offering price in the issuer’s first offering (and in subsequent offerings qualified within a year of the first).
To raise more than $75 million, an issuer would need to use another pathway, such as a registered offering. Rule 102 would let the Commission periodically adjust the tier limits for inflation.
Issuers relying on the fundraising exemption would file an offering statement on new Form 1-CRYPTO, which uses Regulation A’s Form 1-A as a model but is tailored to offerings of covered investment contracts.
The form has three parts.
Once an issuer has qualified an offering statement, it becomes subject to ongoing reporting on the related new forms: annual reports on Form 1-KC, semiannual reports on Form 1-SC, and current reports on Form 1-UC.
The offering circular is the substantive disclosure document within the Form 1-CRYPTO offering statement, and its structure closely tracks the Rule 103 disclosure topics. Overall, the circular resembles a Regulation A Form 1-A offering circular, but with the business-and-securities disclosure replaced by the crypto-specific Rule 103 topics.
Under Rule 305, an issuer that has qualified a Tier 1 or Tier 2 offering becomes subject to ongoing reporting modeled on Regulation A and tailored to covered investment contracts: annual reports on Form 1-KC, semiannual reports on Form 1-SC, and current reports on Form 1-UC. Rules 306 and 307 address suspension of the exemption and the withdrawal or abandonment of offering statements.
Unlike the startup exemption, the fundraising exemption imposes a U.S.-nexus test. Under Rule 300(b), the issuer must be an entity organized in the United States, and, in addition:
These criteria, drawn from part of the “foreign private issuer” definition, are framed as investor protection and as a response to the concern that regulatory uncertainty has pushed crypto projects overseas.
Rule 300(c) borrows Regulation A’s offering conditions. No offer may be made until an offering statement is filed (other than permitted “testing the waters” communications), and no sale may be made until the offering statement is qualified. For a purchaser who is not an accredited investor under Rule 501 of Regulation D, the aggregate purchase price may not exceed 10 percent of the greater of the purchaser’s annual income or net worth (or, for non-natural persons, the greater of revenue or net assets for the most recently completed fiscal year). Rule 300(c) also carries forward Regulation A-style offering-circular delivery mechanics, permits specified categories of continuous or delayed offerings, and allows confidential-treatment requests, but it would prohibit at-the-market offerings.
Yes. Rule 304 would permit non-binding solicitations of interest and similar pre-qualification communications, subject to conditions substantially similar to the “testing the waters” provisions of Regulation A. This allows an issuer to gauge investor interest before incurring the cost of a full offering statement.
Subpart D would establish a non-exclusive safe harbor from the term “investment contract” in the definitions of “security” in Section 2(a)(1) of the Securities Act and Section 3(a)(10) of the Exchange Act.
If the conditions are met, the covered investment contract is deemed by the Commission to have ceased to exist, and the crypto asset that had been subject to it is deemed not to constitute, represent, or be subject to that investment contract for purposes of those definitions.
Rule 400 has two conditions:
The safe harbor turns on the issuer’s own certification and supporting analysis, rather than a Staff determination or a bright-line measure of “decentralization,” which places considerable weight on a self-assessment that could be revisited with hindsight. The release further states that, once the issuer has satisfied the safe harbor, the Commission would take the position that applicable registration, reporting, and other federal securities-law requirements no longer apply from that point forward; the safe harbor is not framed as retroactively cleansing earlier transactions. In addition, a Form TR filing would not amount to Commission approval of the issuer’s determination: the Commission could later challenge whether the conditions were in fact satisfied and, if they were not, take the position that the covered investment contract did not cease to exist and the applicable requirements continued to apply. The safe harbor also would not prevent other parties from asserting that the crypto asset remains subject to an investment contract or is otherwise a security.
Section 18(a) of the Securities Act bars states from requiring registration or qualification of “covered securities,” and Section 18(b)(3) makes a security “covered” with respect to offers and sales to “qualified purchasers, as defined by the Commission by rule.” Subpart E would add a definition of qualified purchaser (in Rule 500) so that state registration and qualification requirements are preempted for offers and sales of covered investment contracts under the regime. States would retain their antifraud authority.
Yes, but conditionally. Rule 500 also reaches secondary-market transactions (by persons other than an issuer, underwriter, or dealer) in covered investment contracts that were initially sold under Regulation Crypto Assets or another federal exemption, but only if the issuer has also satisfied the requirements of a Regulation Crypto Assets exemption with respect to that covered investment contract and remains subject to, and current with, the applicable disclosure, filing, and periodic-reporting requirements. An offering under another federal exemption alone would not trigger secondary-market preemption. In other words, resale preemption is tied to ongoing issuer compliance and can lapse.
No. Regulation Crypto Assets does not address separate Exchange Act questions regarding whether market participants must register as exchanges, brokers, or dealers in connection with secondary trading of covered investment contracts. The Commission states that it will continue to consider whether further action is warranted. Accordingly, immediate transferability and blue-sky preemption would not, by themselves, create a complete federal pathway for secondary trading.
Once the proposal is published in the Federal Register, comments will be open to the public for 60 days. The comment process may reshape key provisions. In the meantime: