On August 18, the SEC proposed new rules titled “Regulation Crypto Assets” that would establish a tailored securities offering regime for “covered investment contracts” — defined as investment contracts involving a crypto asset, but not another security or non-security asset, where the crypto asset itself is not a security. The proposed rules create two exemptions from Securities Act registration requirements: a one-time “startup exemption” permitting offerings of up to $5 million during a four-year period, and a “fundraising exemption” permitting offerings of up to $75 million during each 12-month period. Under the startup exemption, issuers must make public filings and provide principles-based narrative disclosures. The fundraising exemption would include two tiers — up to $20 million for Tier 1 and up to $75 million for Tier 2 — and would require issuers to also provide financial statements, including audited financial statements for Tier 2 offerings, as well as comply with ongoing reporting requirements. Issuers relying on either exemption would remain subject to the securities laws’ antifraud and antimanipulation provisions.

The proposed rules also include a conditional “investment contract safe harbor” under which a crypto asset would not be deemed subject to an investment contract — and therefore would not constitute a “security” — if the issuer has completed or permanently ceased all essential managerial efforts it represented or promised to undertake and has publicly filed a certification that the safe harbor conditions have been satisfied. The proposal would also preempt state securities law registration and qualification requirements for offers and sales of covered investment contracts issued pursuant to the regulation, as well as certain secondary market transactions. According to the SEC, the proposal builds on the Commission’s March 2026 interpretive release clarifying the application of federal securities laws to certain crypto assets and is intended to reduce incentives for issuers to operate offshore while expanding investment opportunities for U.S. investors. Comments are due by October 20.