SEC proposes crypto asset rules with $75 million exemption, safe harbor

The Securities and Exchange Commission proposed Regulation Crypto Assets on Aug. 18. The rule would let token issuers sell up to $75 million a year without registering the offering and, through a separate safe harbor, would declare some tokens outside the definition of a security. The Defiant reported the proposal.

The proposal confronts a question that has run through a decade of SEC crypto enforcement: at what point does a token cease to be a security? It emerges while the Digital Asset Market Clarity Act remains short of a floor vote. That leaves the SEC's rulemaking as the further-developed of the two paths, according to The Defiant.

The plan tiers the exemptions. A small-issuer category covers up to $5 million raised over four years, with public filings when the raise opens and when it closes. A larger category offers two bandwidths: $20 million and $75 million in covered investment contracts over twelve months. At the top band, issuers must supply audited financial statements and accept recurring reporting in the style of Regulation A. Both bands call for narrative disclosures built on principles and keep issuers within the securities laws' antifraud and antimanipulation rules.

The tiering gives an issuer a clear trade-off: lighter reporting for smaller raises, standing obligations for larger ones. A $5 million raise files at the start and end; a $75 million raise carries audits and ongoing filing duties.

SEC Chairman Paul Atkins said in a statement: “Regulation Crypto Assets seeks to provide crypto asset entrepreneurs and market participants with clear pathways to raise capital under the federal securities laws.”

The safe harbor is keyed to what the issuer said it would do. To qualify, the issuer must have either finished or permanently dropped every essential managerial effort it promised under the investment contract, must make no new statements about that work, and must file a public certification with supporting analysis. Once filed, the token is deemed not to be an investment contract. The concept builds on the Commission's March guidance on crypto asset securities law.

The condition is narrow. A project still promising development work cannot use it. A project that has completed its promised work, or formally abandoned it, can certify and step out of the investment-contract category. The test follows the issuer's own representations, not the market's perception of the token.

The certification creates a public document that exchanges could cite when weighing whether a token is a security. The SEC's antifraud authority would remain in place, but the market would have a concrete record to point to.

State registration rules would be preempted for primary offerings under the regulation, and for secondary trades by non-issuers, as long as the issuer stays compliant with federal requirements. That removes a layer of state-level review that would otherwise apply to each offering.

The Commission had scheduled an open meeting for Aug. 14 to consider the rules; it was canceled four days before the proposal was published. The release, numbered 33-11434 under file S7-2026-27, takes comments for 60 days after its Federal Register publication.

The structure stacks disclosure against the amount raised. A $5 million raise files twice across its life; a $75 million raise carries audits and standing reporting obligations. The weight falls on the bigger raises, where investor risk is greatest. That principle is easy to defend; the safe harbor's timing will draw the real argument.

The comment period will test where the line sits. Issuers may press for an earlier safe harbor or a broader definition of 'essential managerial efforts.' Investor advocates will likely want the reporting obligations to run longer than the safe harbor's trigger. The final rule, whenever it appears, will be measured against the exemptions it leaves standing and the certification standard it keeps.

The proposal suggests a different method from the enforcement-led approach that has marked crypto classification for a decade. It lays out conditions an issuer can meet before a dispute arises. The exemption schedule scales with money, and the safe harbor rewards a project that has stopped promising. Whatever the final thresholds, that is a change in how the SEC writes crypto policy.

Bitcoin traded at $64,138, up 0.8% on the day, according to CoinGecko. Total crypto market capitalization was $2.29 trillion.