The Securities and Exchange Commission proposed a dedicated rulebook for token offerings on August 18, 2026. The agency titled it Regulation Crypto Assets, filed under number S7-2026-27. Two releases carry it forward, 33-11434 and 34-106150. For years, the SEC applied decades-old securities law to token sales through enforcement actions. Now it proposes written pathways instead. The shift matters because notice-and-comment rules carry legal force that staff guidance never did.
Reg Crypto is out! https://t.co/v3sGe6SNUQ
— Hester Peirce (@HesterPeirce) August 18, 2026
What the Proposal Actually Covers
Regulation Crypto Assets does not reclassify every token as a security. Instead, it targets what the SEC calls “covered investment contracts.” These are crypto assets sold alongside a promise of future managerial effort by a founding team. The distinction follows the Commission’s March 17, 2026 interpretation, which the CFTC also adopted. Under that reading, the token itself is often a commodity. However, the contract wrapped around its sale can still be a security. The proposal builds a registration-exempt path for exactly that arrangement.
The Startup Exemption
The smaller pathway lets a project raise up to $5 million across a four-year window. Issuers file a Form NOR and publish disclosures on their website. Notably, the SEC permits general solicitation here, so teams can market openly. Non-accredited investors may participate, though caps apply. Individuals cannot commit more than 10% of annual income or net worth. Entities face the same 10% ceiling against revenue or net assets. Each crypto asset can use this exemption only once. Additionally, the resulting securities are unrestricted, which removes the usual lockup friction.
The Fundraising Exemption and Its Two Tiers
Larger raises run through a separate exemption modeled loosely on Regulation A. Tier 1 permits $20 million over any 12-month period without audited financials. Tier 2 raises that ceiling to $75 million but requires audited statements and periodic reporting. Affiliate participation is capped at $6 million under Tier 1 and $22.5 million under Tier 2. Importantly, issuers must organize in the United States with a majority of US-based executives. That requirement directly serves the onshoring goal the agency keeps repeating. Both tiers require a Form 1-CRYPTO offering statement that the SEC must qualify. Bad-actor disqualification rules also apply throughout.
The Safe Harbor Is the Real Story
The most consequential piece sits in proposed Rule 400. It lets a covered investment contract stop being a security altogether. An issuer qualifies once it completes or permanently abandons every essential managerial effort it promised. The team then files a Form TR certification with supporting analysis. Critically, decentralization is not a condition. A centralized project that finishes its stated commitments can still exit. Meanwhile, permanent abandonment also counts if properly documented. The safe harbor addresses investment contract status only, so other securities theories remain live. Attorney Gabriel Shapiro flagged a likely behavioral effect: teams may simply promise less to shorten their exposure.
Disclosure, State Preemption, and Investor Protection
Proposed Rule 103 requires narrative disclosure across ten topic areas. Those cover token economics, governance, source code, security practices, conflicts, development plans, and risk factors. The approach stays principles-based rather than prescriptive, which accommodates fast-moving technical projects. Antifraud and antimanipulation provisions still apply to every offering. Separately, Rule 500 preempts state registration and qualification requirements for qualified purchaser transactions. That preemption reaches certain secondary market trades as well. States keep their fraud enforcement authority in full.
Why the SEC Moved Now
Chairman Paul Atkins framed the proposal as the agency’s most significant crypto action yet. “As the Crypto Capital of the World, the U.S. must and will lead,” he said. The rulemaking extends Project Crypto, the initiative Atkins launched in July 2025. Congress, meanwhile, has stalled. The CLARITY Act cleared the House and Senate Banking Committee but never reached a floor vote. Senators left for August recess without acting, and a procedural vote sits scheduled for mid-September. White House crypto adviser Patrick Witt suggested regulators would move independently if Congress missed that window. The SEC did exactly that.
Process and What Happens Next
The Commission scheduled an open meeting for August 14, then canceled it citing a scheduling issue. Commissioners Atkins, Hester Peirce, and Mark Uyeda advanced the proposal by written vote instead. No dissents followed, in part because the panel now sits all-Republican. Caroline Crenshaw, the agency’s longtime crypto skeptic, departed on January 2, 2026. Peirce kept expectations measured in her statement, calling it “one step on a long road toward a clear, sensible, enforceable regulatory framework for crypto.” She also acknowledged the exemptions “will not fit every model.” Public comments stay open for 60 days after Federal Register publication. Nothing is final until the Commission votes again on adoption.
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