August 19, 2026
What happened?
On August 18, 2026, the SEC proposed “Regulation Crypto Assets,” a new regulatory framework for certain investment contracts involving crypto assets (“covered investment contracts”). The proposal follows the SEC’s March 2026 interpretive release addressing the application of federal securities laws to certain crypto assets and transactions, and represents another step in the SEC’s broader effort to establish clearer rules for crypto asset markets.
The SEC explained that many existing securities regulations predate the development of crypto assets and may complicate transaction planning, impede capital formation and innovation, and incentivize issuers to conduct transactions offshore. Regulation Crypto Assets is intended to address these concerns by providing tailored pathways for crypto asset issuers to raise capital while maintaining investor protections and disclosure requirements.
Key Components
The proposed rule includes two registration exemptions, a safe harbor for investment contracts, and preemption of state securities law registration and qualification requirements within these frameworks.
Startup Exemption. A one-time, non-exclusive exemption from Securities Act registration requirements, permitting an issuer to offer up to $5 million of covered investment contracts over a period of four years. Issuers relying on this exemption would be required to make public filings at the beginning and end of the exemption period and provide investors with certain principles-based narrative disclosures. The Startup Exemption is intended to provide issuers with temporary relief from registration while they work towards completing the managerial efforts promised to investors.
Fundraising Exemption. A two-tier exemption modeled in part by Regulation A. Tier 1 would allow offerings of up to $20 million during a 12-month period. Tier 2 would permit offerings of up to $75 million during a 12-month period. Issuers would be required to publicly file offering materials with narrative disclosures, a discussion of financial condition and financial statements, with audited financial statements for Tier 2 offerings.
Investment Contract Safe Harbor. A conditional safe harbor from the term “investment contract” under the Securities Act and the Exchange Act. An issuer could satisfy the safe harbor once it has completed or permanently ceased promised essential managerial efforts, makes no new such representations, and publicly certifies compliance. The covered investment contract would be deemed to have ceased to exist and the underlying crypto asset would no longer be subject to it for purposes of the statutory definition of “security.”
State Law Preemption. The proposal would define “qualified purchaser” under the Securities Act to preempt state securities law registration and qualification requirements for Regulation Crypto Assets offerings. The preemption would also cover certain secondary market transactions involving covered investment contracts, so long as applicable disclosure, filing, and reporting requirements remain satisfied.
What does this mean for me?
In our coverage of the SEC’s interpretive guidance on digital assets this year, our question was – is a crypto rulemaking next? The answer is yes. The proposed rule is in line with Chairman Atkins’ pledge to help the U.S. become the “crypto capital of the world.” After a crypto task force, the interpretive guidance, and a push for the Clarity Act (still not taken up for a congressional vote), the push for crypto is clear.
However, unlike issuing guidance, rulemaking faces challenges. First are the procedural steps of public comment periods (open for 60 days after publication of the proposal, see here if you would like to make a public comment), followed by the step of adoption and implementation. While this will likely be an easy vote within the commission, as all three current commissioners, Atkins, Uyeda, and Pierce, are conservative appointees, the Clarity Act has stalled in Congress, signaling possible political challenges. Rules also face legal challenges, and any financial group opposed to any aspect of the new crypto framework could file suit. Once the public comment period ends, we will have to see how the SEC responds to that feedback and these potential challenges and whether adoption comes quickly or is delayed.
We will continue to monitor new developments that impact investment advisers and compliance programs. If you have questions, contact us. Fairview is here to help.
