SEC Proposes New Offering Framework for Certain Crypto Assets

The proposal builds on the SEC’s March 2026 interpretation addressing the application of the federal securities laws to crypto assets and transactions involving crypto assets. It reflects the SEC’s view that existing offering requirements, many of which predate crypto assets, may not adequately account for the characteristics of these transactions and may unduly complicate capital formation and transaction planning. The proposal also aims to address the President’s Working Group on Digital Assets Markets July 30, 2025 report that, among other things, requested the SEC establish a “fit for purpose” exemption from Securities Act registration. The proposal is not a new exemption for digital or tokenized securities generally, but rather addresses circumstances in which a non-security crypto asset is offered or sold subject to an investment contract.

New Offering Exemptions
The proposal would establish two non-exclusive exemptions from Securities Act registration: a smaller startup exemption intended to provide issuers with a temporary runway to develop a crypto project, and a larger fundraising exemption modeled in part on Regulation A.

Startup Exemption

Scope
The proposed startup exemption would permit an issuer to conduct offerings of covered investment contracts of up to $5 million over a period of up to four years. The exemption is intended to provide temporary relief from Securities Act registration while an issuer works toward completing the “essential managerial efforts” that it represented or promised to investors it would undertake.