The SEC Has Proposed a Registration Off-Ramp for Token Offerings. The Two Numbers Are $5 Million and $75 Million.

The Securities and Exchange Commission proposed a rule on August 18 that would give issuers of crypto assets two ways to raise money without registering the offering, and a conditional route out of securities regulation entirely once a network no longer depends on the people who built it. The proposal, Regulation Crypto Assets, was published in the Federal Register on August 21. Comments are due October 20, 2026.

It runs 146 Federal Register pages — Release Nos. 33-11434 and 34-106150, File No. S7-2026-27, RIN 3235-AN38 — and would amend six parts of Title 17 of the Code of Federal Regulations.

The two exemptions

The proposal creates two separate paths, distinguished mainly by size and by how much disclosure they demand.

• A startup exemption for offerings up to $5 million over a four-year period, satisfied with principles-based narrative disclosure rather than a registration statement.
• A fundraising exemption for offerings up to $75 million in each 12-month period, structured in two tiers and modeled largely on Regulation A, adding financial statements and ongoing reporting obligations.

Both would require narrative disclosure covering management, the ecosystem, governance, security and risk factors. Neither would displace the antifraud provisions, which continue to apply regardless of whether an offering is registered.

The safe harbor is the harder part

The more consequential piece is the conditional safe harbor from the term "investment contract." Under the Howey framework, an asset is a security when buyers invest money in a common enterprise expecting profits from the efforts of others. The SEC's proposal would provide that a crypto asset meeting specified conditions is not deemed subject to an investment contract once the issuer has, in the proposal's phrasing, completed or permanently ceased all essential managerial efforts.

That is an attempt to write down, in rule text, the point at which a token stops being a claim on somebody's future work and becomes something else. Where exactly that line falls, and who verifies that essential managerial efforts have in fact ceased, is what the comment period will be about.

State preemption

The proposal would preempt state securities registration and qualification requirements for offerings made under the exemptions, achieved by defining the purchasers in such offerings as qualified purchasers. State securities regulators have historically resisted federal preemption of their registration authority, and this element is likely to draw comment from them.

[It would] provide crypto asset entrepreneurs and market participants with clear pathways to raise capital.

Commissioner Mark T. Uyeda, in a separate statement, wrote that the Commission had previously advanced untested legal theories through enforcement actions rather than rulemaking. Both Atkins and Uyeda credited Commissioner Hester Peirce, who filed her own statement and whose earlier safe-harbor proposals the rule resembles. The proposal builds on interpretive guidance the Commission issued in March 2026.

What to watch

The comment file between now and October 20, particularly submissions from state securities administrators on preemption and from institutional investors on the disclosure standard. After that, how long the Commission takes to move from proposal to adoption — and whether the safe harbor survives that process in recognizable form.