The framework would create tailored exemptions for token offerings and a safe harbor allowing qualifying crypto assets to exit securities regulation, but its durability remains dependent on Congress.
MARKET INSIDER — The U.S. Securities and Exchange Commission has proposed its first comprehensive framework tailored specifically to crypto fundraising, offering startups clearer routes to issue tokens without completing the full securities-registration process.
The plan includes a four-year startup exemption for offerings of up to $5 million, a broader exemption covering as much as $75 million in any 12-month period and a safe harbor clarifying when a crypto asset is no longer part of an investment contract.
The proposal represents a major shift from enforcement-led regulation toward formal rulemaking, although issuers would still face disclosure, reporting and anti-fraud obligations.
Key Highlights
- Crypto startups could raise up to $5 million over four years under a simplified, one-time exemption.
- A separate exemption would permit offerings of up to $75 million in any 12-month period, subject to financial statements and continuing disclosures.
- A safe harbor would allow qualifying tokens to leave the securities framework after developers complete or permanently end their promised managerial work.
Two new pathways for token fundraising
SEC Chair Paul Atkins said the proposed “Regulation Crypto Assets” framework seeks to give entrepreneurs clear pathways to raise capital under federal securities laws.
The first pathway is designed for early-stage projects. It would allow a company to raise up to $5 million through token sales during a four-year development period without registering the offering through the conventional public-securities process.
Issuers would still have to notify the SEC and disclose information about the token, project, development team, intended use of proceeds and commitments made to investors.
The four-year period is intended to give developers time to build a functional network or application. It resembles the regulatory runway previously advocated by Commissioner Hester Peirce, who proposed an early version of a token safe harbor in 2020.
The second exemption would permit crypto-related offerings of up to $75 million during any 12-month period. It would impose more substantial obligations, including information about the issuer’s financial condition, financial statements and regular reporting.
Neither provision gives token issuers permission to raise money without accountability. The exemptions mainly replace full securities registration with a disclosure framework designed around the characteristics of crypto projects.
Safe harbor addresses when an investment contract ends
The most consequential element may be the proposed investment-contract safe harbor.
Under the Supreme Court’s Howey test, a transaction can constitute an investment contract when buyers invest money in a common enterprise with a reasonable expectation of profit derived from the essential managerial efforts of others.
A token may therefore be sold as part of a securities transaction even if the underlying digital asset is not inherently a security.
The SEC clarified this distinction in March, establishing a taxonomy covering digital commodities, digital collectibles, digital tools, payment stablecoins and digital securities. The agency said most crypto assets are not securities by themselves, but their sale can still be governed by securities law when accompanied by promises that cause buyers to rely on a development team.
The proposed safe harbor would establish a more predictable point at which that relationship ends. A token could cease to be treated as part of an investment contract after the issuer completes—or permanently stops—the essential managerial efforts promised to purchasers.
This could resolve one of the industry’s most persistent legal questions: whether a token initially sold to finance network development must remain within the securities framework indefinitely after the network becomes operational.
The safe harbor would be optional, and projects would need to satisfy its conditions. Fraud and misleading disclosures would remain subject to enforcement.
The framework builds upon the SEC’s March interpretation of federal securities laws, which explains how a non-security crypto asset can become subject to—and later separate from—an investment contract. SEC interpretation
A decisive change from regulation by enforcement
The proposal reflects a sharp change in regulatory philosophy under President Donald Trump and Atkins, his appointed SEC chair.
During the previous administration, the SEC sued major platforms and token issuers for allegedly offering unregistered securities or operating unregistered exchanges. The industry argued that the agency was attempting to apply rules written for traditional securities without providing a workable registration route for decentralized networks.
Under its current leadership, the SEC has dismissed or ended litigation against companies including Coinbase and Binance, withdrawn restrictive accounting guidance and issued interpretations covering staking and other crypto activities.
Formal rulemaking is more significant than dropping individual enforcement cases. It establishes generally applicable standards and gives market participants an opportunity to comment on the regulator’s legal and economic assumptions.
Industry groups welcomed the proposal. The Blockchain Association described it as an important step toward fit-for-purpose rules, while The Digital Chamber said it would work with the SEC to support domestic innovation and consumer protection. Reuters
Why Congress is still necessary
The proposal does not resolve every aspect of U.S. crypto regulation.
The SEC can interpret and grant exemptions under the securities laws, but it cannot independently create a complete market structure or permanently divide jurisdiction between itself and the Commodity Futures Trading Commission.
Legislation is still needed to determine which regulator oversees spot trading in digital commodities, establish durable rules for crypto exchanges and intermediaries, and ensure that the framework cannot easily be reversed by a future administration.
The Digital Asset Market Clarity Act passed the House with bipartisan support but has stalled in the Senate. The bill would give the CFTC authority over qualifying digital commodities while preserving SEC oversight of tokenized securities and investment contracts.
Atkins has acknowledged that only Congress can make the regulatory framework “future-proof.” He has described the SEC’s rulemaking as both a bridge to legislation and an opportunity to begin implementing concepts already developed through congressional negotiations. SEC Chair Paul Atkins
A future SEC could attempt to amend, narrow or repeal the exemptions. Although that would require another administrative process, agency rules remain less durable than statutes.
Implications for crypto companies and investors
The proposal could reduce the cost and legal uncertainty of launching blockchain projects in the United States.
Smaller developers would gain a defined route to raise limited capital, while larger projects could access up to $75 million annually without pursuing a conventional initial public offering. Clearer rules may also encourage projects that previously incorporated abroad to operate or raise capital domestically.
Exchanges and custodians would benefit from greater certainty over when tokens stop being associated with securities offerings. However, the proposal does not automatically authorize trading in every token, and platforms will still need to assess each asset’s structure, distribution and continuing relationship with its issuer.
For investors, the required disclosures could provide more consistent information than many existing token white papers. Yet exemptions generally offer fewer protections than full registration, making the quality, verification and enforcement of those disclosures critical.
The framework is structurally positive for the U.S. digital-asset industry, but it should not be interpreted as an automatic catalyst for Bitcoin or Ether prices. Its most direct beneficiaries may be token issuers, exchanges, custodians, venture investors and infrastructure providers.
Relevance for tokenized real-world assets
The proposal could also support the development of tokenized bonds, funds and real-world assets, but these instruments require an important distinction.
A blockchain-based representation of a bond, share or investment fund remains a security because the underlying legal and economic instrument is a security. Tokenization does not remove conventional requirements concerning issuance, investor eligibility, custody, transfer restrictions and disclosure.
The safe harbor is more relevant to non-security tokens initially distributed through investment contracts than to tokenized securities backed by financial assets.
For real-world-asset structures, the regulatory value lies instead in clearer offering exemptions and the SEC’s willingness to accommodate issuance, recordkeeping and settlement on blockchain networks.
What happens next
The proposal will remain open for public comment for 60 days following publication in the Federal Register.
The SEC can revise the framework in response to submissions from investors, crypto companies, exchanges, academics and consumer-protection groups before holding a vote on a final rule.
Key questions include the information required from issuers, eligibility for each exemption, resale restrictions, treatment of affiliated holdings and the conditions a project must satisfy to use the investment-contract safe harbor.
The proposal does not end the U.S. crypto-regulation debate. It does, however, replace years of uncertainty with the outline of a usable compliance system—one that permits token-based capital formation while keeping disclosure and anti-fraud protections in place.
