SEC Issues 'Regulation Crypto Assets' Proposal After Abruptly Cancelling Vote

The U.S. Securities and Exchange Commission (SEC) has issued its proposed “Regulation Crypto Assets” framework just days after abruptly cancelling a meeting scheduled to vote on whether to advance the same rulemaking.

The development follows the SEC's earlier move toward formal crypto issuance rules. However, as Unlock Blockchain reported days later, the agency unexpectedly delayed the long-awaited Reg Crypto rulemaking with no new meeting date. The SEC has now moved ahead with the proposal, reversing that unexpected delay and formally opening its first major permanent rulemaking process for crypto asset offerings.

Two Exemptions for Crypto Asset Offerings

The proposed framework would establish two routes for eligible crypto asset offerings.

The first would provide a startup exemption, allowing issuers to raise up to $5 million over a four-year period. Issuers using this exemption would be required to make public filings at the beginning and end of the offering period, alongside other disclosures for investors.

A second exemption would permit offerings of up to $75 million during a 12-month period but would impose broader disclosure and reporting obligations. Issuers would need to file offering materials publicly, disclose financial information and comply with ongoing reporting requirements.

Under both exemptions, issuers would be required to provide principles-based narrative disclosures to investors. The larger offering exemption would additionally require financial statements and continuing reporting obligations.

The SEC said the offerings would remain subject to applicable anti-fraud and anti-manipulation provisions under U.S. securities laws.

Safe Harbor for Decentralized Networks

The proposal also addresses one of the crypto industry's long-running regulatory questions: when an asset initially sold under an investment contract may no longer be treated as part of one.

SEC Chairman Paul Atkins said the framework would include a safe harbor for issuers that have completed, or permanently ceased, the essential managerial efforts they represented they would undertake under an investment contract.

“In line with the commission’s earlier interpretative guidance, this proposal would also allow for a safe harbor once an issuer has completed or permanently ceased all essential managerial efforts that it represented or promised it would take under an investment contract,” Atkins said.

The provision could provide greater clarity around the point at which a network or project has moved beyond reliance on its original development team, a key issue in determining whether transactions involving crypto assets fall within securities regulation.

“Today, we are charting a new course with a package of exemptions that would facilitate capital formation and allow crypto asset innovation to flourish in the United States in the years ahead,” Atkins said.

SEC Rulemaking Moves Ahead as Congress Pursues Market Structure Law

The proposal is particularly significant because Congress has yet to enact comprehensive legislation governing U.S. crypto market structure.

The SEC had previously cancelled an August 14 meeting that was expected to address the same proposal, citing an “unforeseen scheduling issue.” Its decision to move forward with the rule this week therefore comes as a notable reversal from the earlier delay.

The Commission will accept public comments for 60 days before moving toward a final rule.

Atkins stressed, however, that SEC rulemaking cannot replace legislation. As the Senate continues work on the Digital Asset Market Clarity Act, he said congressional action remains necessary to establish durable rules for the sector.

“Legislation remains indispensable to enacting ‘future-proofed’ rules of the road that are durable enough to protect the work we are undertaking today from being unwound by a future rogue regulator,” Atkins said.

Crypto Industry Welcomes Proposed Framework

The proposal was welcomed by parts of the digital asset industry, which has long called for clearer rules governing token issuance and the application of securities laws to crypto assets.

The Digital Chamber CEO Cody Carbone said the SEC had incorporated several recommendations put forward by crypto companies in the proposed framework.

The organization said it would continue engaging with the SEC as the proposal moves through the public comment process, with the goal of ensuring that both consumers and the U.S. digital asset industry can benefit from a clearer regulatory framework.

If adopted, Regulation Crypto Assets would represent the SEC's first dedicated permanent rule framework focused specifically on crypto asset offerings. Its eventual impact, however, will depend both on the final form of the SEC's rule and whether Congress succeeds in establishing a broader statutory framework for the U.S. crypto market.