SEC sends sweeping digital asset regulation proposal to the White House

The Securities and Exchange Commission has forwarded a proposed rule to the White House that would create a comprehensive regulatory framework for digital asset fundraising. Called “Regulation Crypto Assets,” the proposal carves out specific exemptions from traditional securities registration and introduces a mechanism for crypto tokens to eventually shed their investment contract classification altogether.

What the proposal actually does

The framework, proposed on August 18 under SEC Chairman Paul S. Atkins, creates two distinct exemptions from the registration requirements that have historically made US-based crypto fundraising a legal minefield.

The first is a startup exemption, allowing early-stage projects to raise up to $5 million over a four-year period without going through the full registration gauntlet. The second is a fundraising exemption that permits raises of up to $75 million within a 12-month window, though this one comes with strings attached: audited financials and ongoing reporting obligations.

The provision generating the most industry attention is the conditional “investment contract safe harbor.” Under current law, many crypto tokens are classified as investment contracts, a category of security, because their value depends on the ongoing efforts of a founding team or promoter. The safe harbor would allow issuers to delink their tokens from that classification once those essential management efforts cease.

In practical terms, this means a project could launch a token as a security, raise capital under the new exemptions, build out a sufficiently decentralized network, and then have its token reclassified as a non-security crypto asset.

The broader regulatory picture

This proposal builds on a joint interpretation issued by the SEC and CFTC in March 2026, which categorized certain digital assets, including Bitcoin and Ether, as non-securities. That earlier move was itself a significant departure from the enforcement-heavy posture that characterized the SEC under previous leadership.

Chairman Atkins has framed the initiative as balancing two priorities: fostering capital formation in the US and maintaining the core investor protections embedded in securities law.

The proposal is now in the public comment period, with submissions due by October 20.

What this means for the market

The $75 million fundraising exemption with audited financial requirements creates a regulated pathway for domestic fundraising with a compliance blueprint that fund managers can underwrite against.

The safe harbor provision addresses the persistent legal question of when, if ever, a token stops being a security. The Howey test, the 1946 Supreme Court framework that the SEC has historically applied to crypto, does not have a clean off-switch. This proposal creates one.

For exchanges, the safe harbor could eventually reduce the compliance burden of listing tokens that have successfully decentralized. For investors, it provides a clearer picture of what they are buying and what regulatory protections apply at each stage of a token’s lifecycle.

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