The SEC’s Long-Awaited Crypto Proposal

A tailored securities offering regime for crypto assets 

After years of applying decades-old securities rules to digital assets, the Securities and Exchange Commission (SEC) has proposed a purpose-built framework for raising capital with crypto assets and, under specified conditions, allowing those assets to cease being subject to an investment contract under the federal securities laws. Although the SEC continues to coordinate with the Commodity Futures Trading Commission and has acknowledged the importance of market structure legislation, Chairman Paul Atkins has made clear that the SEC is prepared to move forward under its existing authority even if Congress does not act. Accordingly, on August 18, 2026, the Commission proposed Regulation Crypto Assets (Reg CA) for a specifically defined class of investment contracts involving crypto assets, referred to as “covered investment contracts.”[1] Building on the SEC’s March 17, 2026, interpretive release (the 2026 Interpretation),[2] the proposal seeks to build crypto capital formation while preserving the investor protections at the core of the federal securities laws.[3]

Key Takeaways

• A safe harbor from “investment contract.” A conditional safe harbor would allow a crypto asset to be deemed no longer subject to an investment contract once the issuer completes or permanently ceases its essential managerial efforts and files a transition report, codifying part of the 2026 Interpretation.[4]
• A tailored exemptive regime. There are two new exemptions from Securities Act registration available to crypto asset issuers, a “startup exemption” (for crypto asset offerings up to $5 million over four years) and a “fundraising exemption” (for crypto asset offerings up to $75 million per 12-month period, modeled on Regulation A). These exemptions would replace the ill-fitting registration and exemption choices crypto asset issuers face today.[5]
• Federal preemption of state law. A new definition of “qualified purchaser” would preempt state securities registration and qualification requirements for both primary offerings and many secondary-market transactions. Reg CA would reduce the application of state Blue Sky laws to purchasers’ acquisitions and certain resales of covered investment contracts.[6] That said, the effectiveness of these preemption provisions remains open to debate.