The SEC proposes a door.
$75 million a year, and a way out of investment-contract treatment.
The U.S. Securities and Exchange Commission has proposed a regulatory framework built specifically for crypto projects. Called Regulation Crypto Assets, it would give qualifying companies clearer ways to raise money in the United States without completing the traditional — and often expensive — securities registration process.
The single most important thing to hold on to before reading any further: these rules are proposed. They are not in effect. Nothing described here is available to rely on today, and some of it may never be.
The proposing release has since been published in the Federal Register, fixing the comment deadline at October 20, 2026. This piece has been revised against the release itself rather than the announcement: the exemptions are named, the larger one is split into two tiers with audit required only at the higher, the safe harbor carries a second condition, and the framework's scope is narrower than the initial coverage suggested. Those changes are reflected throughout.
Whyte Consolidated Research · 2026-08-20 · updated 2026-09-04 · 12 min read · On the proposed crypto framework
Two exemptions from the 1933 Act.
The proposal would create two exemptions from the normal registration requirements of the Securities Act of 1933. They differ in size, in frequency, and in what they ask of the issuer afterwards.
The first, the Startup Exemption, would allow a project to raise up to $5 million over a four-year period — once, and once only, for the same or a substantially similar crypto asset, with the issuer and its affiliates counted together. The second, the Fundraising Exemption, is modelled on Regulation A and splits into two tiers: up to $20 million in any 12-month period at Tier 1, up to $75 million at Tier 2.
That tiering is the detail most of the coverage dropped, and it is the one that matters operationally. Both tiers file an offering statement on EDGAR — a new Form 1-CRYPTO — that the SEC must qualify before anything can be sold, and both carry annual, semiannual and current reporting. The audit is what separates them: Tier 2 financial statements must be independently audited under US GAAS or PCAOB standards, and Tier 1's need not be. Both tiers also cap non-accredited investors at 10% of the greater of their annual income or net worth.
The Startup Exemption is lighter but not free of machinery: a Form NOR at the outset certifying an intent to deliver within four years, narrative disclosure published free on a website rather than through EDGAR, an amendment within 30 days of each year-end if anything material changed, and a Form TR at the end of the four years. Neither exemption is available to anyone caught by the “bad actor” disqualification provisions borrowed from Regulation A.
Both would require issuers to give investors clear information about the project, the crypto asset itself, how the money will be used, and the risks involved — a principles-based list running to ten headings, including governance, information security and source code, token economics and allocations, and conflicts of interest. Stated plainly, the SEC is offering crypto companies a less complicated way to raise capital on the condition that they remain honest and transparent with investors. The process shrinks. The duty does not: both exemptions leave the anti-fraud and anti-manipulation provisions fully in force.
Rule 200. For the early stage, while the issuer is still doing the work it promised. Available once for the same — or a substantially similar — crypto asset, the issuer and its affiliates counted together.
- ·Narrative disclosure published free on a website, not EDGAR.
- ·Form NOR filed at the start, certifying intent to deliver within four years.
- ·Disclosure amended within 30 days of year-end if anything material changed.
- ·Form TR filed at the end of the four years.
Rules 300–307, modelled on Regulation A. Only for issuers organised in the United States with US management, assets and administration.
- ·Form 1-CRYPTO offering statement filed on EDGAR — and the SEC must qualify it.
- ·Financial statements under US GAAP, but no audit required.
- ·Ongoing reports: annual, semiannual and current.
- ·Non-accredited investors capped at 10% of the greater of income or net worth.
The same rules, the higher ceiling — and the one obligation that actually separates the tiers.
- ·Everything Tier 1 requires, plus —
- ·Financial statements independently audited, under US GAAS or PCAOB standards.
- ·The same annual, semiannual and current reporting.
- ·The same 10% cap on non-accredited investors.
The framework applies to a defined thing: a Covered Investment Contract, meaning an investment contract where a crypto asset is subject to it, that crypto asset is not itself a security, and no other asset is subject to the contract. That third condition is doing quiet work — this is a regime for the wrapper around a non-security token, not for tokenised equity or debt.
So the proposal does not reach crypto assets that are themselves securities, and it does not touch registration requirements for intermediaries — not federally, and not at state level for broker-dealers. It is a comparatively narrow instrument arriving while the CLARITY Act is still pending, and it builds on the joint interpretation the SEC and CFTC published in March.
Two features are worth flagging for anyone comparing it against the existing menu. It is non-exclusive — an issuer can still fall back on Regulation D or Section 4(a)(2). And unlike those routes, what is sold under Regulation Crypto Assets would not be restricted securities, nor otherwise subject to rule-based transfer restrictions. For an asset meant to circulate, that is arguably the single most consequential line in the proposal.
The promise ends, and so does the contract.
The proposal also includes what the SEC calls a conditional safe harbor, and this is the part with the longer half-life.
Most crypto projects begin with a central development team. Investors buy tokens because they expect that team to build a network, develop the technology, attract users and, in doing so, increase the token's value. Under existing securities law that arrangement may be an investment contract— and therefore regulated as a security. The dependency on other people's efforts is the thing being sold.
Under proposed Rule 400, a Covered Investment Contract would be deemed to have ceased to exist if two conditions are met. First, the issuer must complete or permanently cease all the essential managerial efforts it represented or promised — and must not make, or intend to make, new ones. Second, it must file a transition report on Form TR setting out the analysis supporting that conclusion.
The second condition is easy to skip past and worth dwelling on. The relief is not automatic and it is not silent: the issuer has to put its reasoning on the record, in public, and live with it.
A worked example. A company sells tokens to finance the development of a blockchain network. While the company is building and controlling that network, the token sale may be treated as a securities transaction. Once the network is operating and the company has finished its promised work, the token could potentially qualify for the safe harbor — subject to the project satisfying every one of the SEC's conditions.
What the proposal explicitly does not do is declare cryptocurrency, as a category, to be outside securities law. Each project would have to qualify on its own structure and circumstances.
And there are two limits on the relief that deserve more attention than they have had. The safe harbor governs how the Commission administers the securities laws — the proposing release acknowledges that other parties can still assert a crypto asset is subject to an investment contract, which in practice means private litigants. The SEC itself can also revisit an issuer's determination after Form TR is filed. Filing is a position, not an adjudication.
The second limit is what is absent. The Commission considered requiring the network to be sufficiently decentralised, and rejected it. There is no decentralisation test in Rule 400. What survives is the issuer's own promises: if you told investors you would decentralise, whether you did is measured against how you described it, not against any market-wide notion of what decentralisation means. Projects should assume their own marketing is the standard they will be held to.
One filing, not fifty.
The proposed rules would also override certain state securities-registration requirements for qualifying offerings, and for some secondary-market transactions. The mechanism is neat: proposed Rule 500 defines anyone to whom these securities are offered or sold as a “qualified purchaser”, which makes the securities “covered securities” under Section 18 of the Securities Act — and states may not require registration of those.
Secondary-market preemption comes with a string attached. It holds only while the issuer remains current on its disclosure and filing obligations. Lapse on the paperwork and the relief downstream of you lapses with it, which quietly turns ongoing compliance into something the market has a reason to watch.
For a small issuer this is not a minor convenience. Fifty parallel registrations is a cost structure, and one that falls hardest on exactly the early-stage projects the smaller exemption is aimed at.
What preemption does not touch is misconduct. Federal and state authorities could still enforce laws against fraud, misleading statements and other unlawful conduct. The registration requirement is what would be preempted — not the police power behind it.
Nor does it reach intermediaries. State registration requirements for broker-dealers and others standing between issuer and buyer are untouched, as are the federal ones. If you are the venue rather than the issuer, this proposal does very little for you.
Uncertainty had already priced itself in.
For years crypto companies have argued that the existing securities rules were written for traditional investments and do not map cleanly onto blockchain networks and digital assets. The argument is contested, but the consequence is not: the absence of clear rules produced behaviour.
Some projects restricted access for American investors. Some moved operations offshore. Some launched anyway and faced enforcement action afterwards — which is the most expensive way to discover where a line was. The proposed framework is an attempt to make the path predictable enough that the answer is known before the raise rather than after it.
- →Lower legal and compliance costs than a full registered offering.
- →Clearer fundraising rules, in place of case-by-case uncertainty.
- →Greater access to American investors for projects that had restricted them.
- →A possible path for a token to move beyond investment-contract treatment.
- →Less pressure to establish operations outside the United States.
Investors would stand to gain something too — more consistent disclosures, and clearer information about the companies and the people behind crypto offerings. Consistency is worth more than volume here; comparability is what a disclosure regime actually buys you.
An exemption is a trade, and someone is on the other side of it.
The proposal could encourage innovation. It also does what every exemption does: it delivers investors less information than a fully registered public offering would. That is not a criticism of the design — it is the design — but it is worth naming rather than glossing.
Exemptions exist precisely because they demand less. Investors in an exempt offering see a thinner disclosure record than in a fully registered public deal — that is the trade being made, and it is being made on their behalf. At Tier 1 the financial statements are not even audited.
Project failure, token-price volatility, dishonest management, cybersecurity failure and limited ability to recover money are unchanged by the existence of an exemption. Smaller or less experienced investors carry them in full, which is presumably why non-accredited buyers are capped at 10% of the greater of their income or net worth.
This is the limitation most easily missed. Rule 400 governs how the Commission administers the securities laws — it does not stop a private litigant asserting that a crypto asset is still subject to an investment contract, and the SEC itself can later challenge an issuer's determination that the conditions were met. Filing Form TR is a position, not an adjudication.
Whether a team has genuinely completed its work — or quietly continues to control the network — is a question of fact, and a contested one. The Commission considered requiring the network to be sufficiently decentralised and dropped it, so the test turns on what each issuer promised rather than on any market-wide notion of decentralisation.
Which is why the detail that will matter most is not the headline number. Clear conditions, reliable disclosures and strong enforcement against fraud are what decide whether a framework like this protects anyone. The $75 million is the part that gets reported. The conditions are the part that does the work.
Sixty days, then a decision that is not guaranteed.
The Commission proposed the framework on August 18, 2026, and the proposing release was published in the Federal Register on August 21. That started the 60-day clock, which means comments are due on October 20, 2026. The SEC can then revise the rules, adopt them, or decide not to proceed at all.
The comment record is not a formality here. The release asks for input on several of the load- bearing choices — whether the one-time restriction on the Startup Exemption is too tight, what “substantially similar” and “functionally identical” should mean, whether the certification standard is the right one, and whether token shelf or at-the-market offerings ought to be allowed. The conditions that end up in the final rules are still genuinely open.
Even adoption would not settle it. Rules can be challenged in court, changed by a future administration, or overtaken by Congress — the CLARITY Act is still pending, and would cover far more ground than this proposal does. For now, crypto businesses cannot rely on these proposed exemptions as if they were already law — and any plan that assumes otherwise is planning on a rule that does not exist.
The Commission proposed Regulation Crypto Assets on August 18, 2026 (release 33-11434).
Publication in the Federal Register on August 21, 2026 started the 60-day clock.
October 20, 2026. After that the SEC can revise the rules, adopt them, or decline to proceed.
Adopted rules could face legal challenge, be changed by a future administration, or be overtaken by the CLARITY Act or other legislation.
A narrower door, not an open field.
Regulation Crypto Assets is an attempt to replace regulatory uncertainty with a clearer system. It would let qualifying projects raise as much as $75 million a year without going through the traditional public-registration process, while still requiring disclosure and investor protections. And it would offer a route for certain crypto assets to move beyond investment-contract treatment once their developers have finished the essential work they promised, said so on Form TR, and shown their working.
Read fairly, the proposal is generally positive for responsible crypto businesses that want to operate in the United States. It is not blanket permission for unregulated token sales, and it does not mean every cryptocurrency stops being a security. Those two sentences will be the ones most often dropped from the coverage, and they are the ones that actually determine who this helps.
Read closely, it is narrower still than that. It covers the wrapper around a non-security token and nothing else — not tokenised securities, not intermediaries, not the venues. It binds the Commission and leaves private plaintiffs where they were. And the headline number is the top of a two-tier ladder, not a single door. None of that makes it less useful. It makes it a real rule rather than an amnesty — which, for anyone planning to build inside it, is the more valuable of the two.
The final impact will depend on the conditions written into the completed rules — and on whether the SEC adopts them at all. Until then the honest status of the framework is: proposed.
It is worth noting what this sits alongside. The direction of travel in U.S. digital-asset policy has been toward regulated market infrastructure rather than away from it — settlement, custody and disclosure being pulled into recognisable frameworks rather than left outside them. A fundraising exemption with conditions attached is a piece of that pattern, not a break from it.
Regulation Crypto Assets — questions
- What is Regulation Crypto Assets?
- A framework proposed by the U.S. Securities and Exchange Commission on August 18, 2026 for offerings of certain investment contracts involving crypto assets. It would create two exemptions from Securities Act registration, a conditional safe harbor under which a Covered Investment Contract is deemed to cease to exist, and preemption of state registration requirements. It is a proposal; comments close October 20, 2026.
- How much can a project raise under the proposed exemptions?
- The Startup Exemption allows up to $5 million over a four-year period, once only for the same or a substantially similar crypto asset. The Fundraising Exemption has two tiers: up to $20 million in any 12-month period at Tier 1, and up to $75 million at Tier 2. Both tiers file a Form 1-CRYPTO offering statement that the SEC must qualify, and both report on an ongoing basis.
- What is the difference between Tier 1 and Tier 2?
- The audit, and the ceiling. Tier 2 caps at $75 million and requires financial statements independently audited under US GAAS or PCAOB standards; Tier 1 caps at $20 million and requires financial statements under US GAAP but no audit. Otherwise the tiers are close: both file Form 1-CRYPTO on EDGAR for SEC qualification, both file annual, semiannual and current reports, and both cap non-accredited investors at 10% of the greater of income or net worth.
- What is a Covered Investment Contract?
- The thing the framework actually regulates. An investment contract qualifies if a crypto asset is subject to it, that crypto asset is not itself a security, and no other asset is subject to the contract. So the proposal addresses the wrapper around a non-security token. It does not cover crypto assets that are themselves securities, and it does not touch registration requirements for intermediaries at either federal or state level.
- What are the conditions of the investment contract safe harbor?
- Proposed Rule 400 requires two things together. First, the issuer must complete or permanently cease all essential managerial efforts it represented or promised, and must not make or intend to make new ones. Second, it must file a transition report on Form TR containing the analysis supporting that determination. The Commission considered adding a decentralisation requirement and rejected it.
- Does the safe harbor stop anyone from suing?
- No, and this is its most important limit. Rule 400 governs how the SEC administers the Securities Act and Exchange Act. The proposing release acknowledges that other parties — in practice private litigants — could still assert that a crypto asset is subject to an investment contract, and the SEC itself could later challenge an issuer's determination. Filing Form TR states a position; it does not adjudicate one.
- How does the proposal affect state securities registration?
- Proposed Rule 500 treats anyone to whom these securities are offered or sold as a qualified purchaser, making them covered securities under Section 18 so states cannot require registration. Preemption extends to certain secondary-market transactions, but only while the issuer stays current on its disclosure and filing obligations. State broker-dealer registration is not preempted, and anti-fraud enforcement is unaffected.
- When would the rules take effect?
- There is no effective date. The proposing release was published in the Federal Register on August 21, 2026, and the comment period closes October 20, 2026. The SEC can then revise the rules, adopt them, or decline to proceed. Even if adopted, they could face legal challenge, be changed by a future administration, or be overtaken by the pending CLARITY Act. Until then, no offering may be made in reliance on them.
Related Whyte Consolidated research on digital-asset regulation and settlement:
- Whyte Consolidated — Digital assets as regulated market infrastructure
- Whyte Consolidated — How crypto is quietly saving America
- Whyte Consolidated — BTX: when the block reward is a matrix multiply
- Whyte Consolidated — When software spends: settlement for the agentic economy
Sources: SEC press release 2026-76 (August 18, 2026); the proposing release, Regulation Crypto Assets, Securities Act Release No. 33-11434, as published in the Federal Register on August 21, 2026 (document 2026-17183), which fixes the comment deadline at October 20, 2026; and published client analyses of the release by WilmerHale, Hunton and others, used to corroborate the rule-level detail. All figures, thresholds and conditions described here are drawn from the proposal and are subject to change through the comment process; the operative text is the proposed rule itself, not this summary. The framework is a proposal and is not in effect, and no offering may be conducted in reliance on it. Diagrams are illustrative schematics, not data or legal maps. This article is general information about a regulatory proposal. It is not legal, tax, accounting or investment advice, not a recommendation or solicitation to buy or sell any asset, and not an offer of any product. Anyone considering a token offering or an investment in one should take professional advice on their own circumstances.