SEC proposes $75 million crypto exemption as Congress stalls on bill

The SEC on Tuesday proposed "Regulation Crypto Assets," exempting crypto asset offerings of up to $5 million over four years and up to $75 million per 12-month period from federal securities registration requirements.

"Legislation remains indispensable to enacting 'future-proofed' rules of the road that are durable enough to protect the work we are undertaking today from being unwound by a future rogue regulator," SEC Chairman Paul S. Atkins said in a statement.

Both tracks require issuers to provide principles-based narrative disclosures to investors. The $75 million track adds financial statement requirements and ongoing reporting obligations. The proposal also includes a conditional safe harbor excluding certain crypto assets from the "investment contract" definition under the Securities Act of 1933 and the Securities Exchange Act of 1934 once an issuer has completed or permanently ceased all essential managerial efforts. The rule would preempt state securities law registration and qualification requirements for offerings under the exemptions.

The proposal follows the SEC's March 2026 interpretive guidance on crypto assets and federal securities laws, and arrives as the Senate's Digital Asset Market Clarity Act remains stalled. Senate Majority Leader John Thune filed cloture on the bill Aug. 7, with the procedural vote scheduled to ripen Sept. 15. The SEC had cancelled an Aug. 14 meeting meant to vote on the proposal, citing an "unforeseen scheduling issue," before issuing it Tuesday.

Two Tracks, One Goal

The $5 million track functions as a one-time exemption for startups and early-stage projects, while the $75 million track targets more established issuers with recurring fundraising needs. Both require issuers to make narrative disclosures available to investors, though the larger track demands financial statements and ongoing reporting — a structure that mirrors Regulation A and Regulation D under existing securities law.

The safe harbor provision addresses the long-standing question of when a crypto asset ceases to be an investment contract. Once an issuer has completed or permanently ceased all essential managerial efforts it promised under the contract, the asset would no longer be subject to the "investment contract" definition — effectively removing it from SEC jurisdiction. This provision builds directly on the Commission's March 2026 interpretive guidance, which clarified how federal securities laws apply to certain crypto assets and transactions.

Congressional Clock Ticking

The proposal is distinct from the SEC's separate "innovation exemption" for tokenized securities, which has faced repeated delays after White House and Wall Street raised concerns about its legal basis. The Securities Industry and Financial Markets Association questioned how blockchain venues would comply with existing equity-market rules, including brokers' duty to seek the best available execution for customers. Industry sources said Wall Street firms wanted changes of this magnitude handled through formal notice-and-comment rulemaking rather than an exemption, which could expose the agency to legal challenges over the limits of its statutory authority.

The public comment period will remain open for 60 days following publication in the Federal Register. The proposal, identified as RIN 3235-AN38, was received by the Office of Information and Regulatory Affairs on Aug. 12. If approved, the rule would reduce incentives for issuers to operate offshore and expand investment opportunities for U.S. investors with stronger, more consistent protections. The SEC's action also comes as traditional exchanges including Nasdaq and the New York Stock Exchange continue building infrastructure for blockchain-based securities trading, with Nasdaq receiving SEC approval in March for a pilot allowing tokenized stocks to trade alongside conventional securities.

The proposal's two-track structure gives crypto entrepreneurs a clear path to raise capital under federal securities laws while preserving investor protections. For the broader market, the rule could accelerate the onshoring of crypto innovation that has migrated to offshore jurisdictions, particularly as Congress continues to debate the Digital Asset Market Clarity Act through September.

This article is for informational purposes only and does not constitute investment advice.