SEC Opens Comment on Regulation Crypto Assets Until October 20

The SEC wants to give crypto founders a written path to raise money in the US, and it is taking public comments on the draft until Oct. 20, 2026. The proposal is called Regulation Crypto Assets, and it landed in the Federal Register on Aug. 21, 2026, with a 60-day comment window that runs from that date.

None of it is usable yet. The exemptions, the safe harbor and the state-law preemption are all still proposals. Until a final rule takes effect, issuers cannot rely on any of them, as law firm A&O Shearman notes in its reading of the proposal.

The proposal follows the Commission's March 2026 interpretation of how the federal securities laws apply to certain crypto assets and transactions, and it is filed as File No. S7-2026-27, under RIN 3235-AN38.

A $5 Million First Raise and a $75 Million Annual One

The draft creates two exemptions for what it calls covered investment contracts, meaning investment contracts that involve a crypto asset.

The first is the startup exemption. It is one-time, permits offerings of up to $5 million, and stretches across a four-year period. An issuer using it would file a Form NOR notice and a Form TR transition report.

The second is the fundraising exemption, modeled mainly on Regulation A. It is tiered. Tier 1 allows up to $20 million in a 12-month period, including up to $6 million sold by affiliated selling holders. Tier 2 allows up to $75 million in the same window, including up to $22.5 million from affiliated selling holders. An issuer would have to be a qualifying US-organized entity and file an offering statement on the proposed Form 1-CRYPTO.

The tiers differ in what they demand. Tier 2 financial statements would generally require an independent audit, and both tiers carry ongoing reporting requirements.

Commissioner Hester M. Peirce, in her statement on the proposal, put the two side by side:

The startup exemption would permit offerings of up to $5 million during a four-year period. The fundraising exemption, conditioned on the provision of financial statements and ongoing reporting requirements, would permit offerings of up to $75 million during each 12-month period.

Both would require principles-based disclosures, and Peirce notes that the antifraud and antimanipulation provisions of the federal securities laws would apply as usual.

The Safe Harbor Delinks a Token From Its Contract

The other half of the proposal is a conditional safe harbor from the term "investment contract" as it appears in the definitions of "security" in the Securities Act of 1933 and the Securities Exchange Act of 1934.

SEC Chairman Paul S. Atkins described the mechanism in the Commission's announcement: the relief would apply once an issuer has completed, or permanently ceased, all the essential managerial efforts it represented or promised it would take under an investment contract.

Peirce framed the same idea from the token's side. She said the safe harbor would let an issuer of an investment contract delink a crypto asset from the investment contract it was once associated with.

How to File a Comment Before October 20

Comments should reference File No. S7-2026-27 and can go through the SEC's internet comment form or by email to rule-comments@sec.gov.

Two practical notes from the form itself. Everything submitted will be made available to the public, so send only what you are willing to see published. And a commenter who does not give a name will be identified as "Anonymous."

Peirce has asked for the input directly: "The Commission cannot walk that road alone, so please send us your thoughts during the sixty-day comment period."

There is a lot to answer. The proposal runs 146 Federal Register pages and contains 149 numbered requests for comment, plus further questions on paperwork burdens and the effect on small entities. That structure rewards specifics. A comment that names the exemption, the form or the reporting line it wants changed is easier for the staff to place than a general objection.

The SEC had not published a tally of comments received as of this writing, so it is not clear how many have already been filed or from whom.

What the Exemptions Do Not Cover

The draft is narrower than the phrase "crypto rules" suggests. The exemptions would apply to offering the covered investment contract itself, not to offering the underlying non-security crypto asset. A crypto asset that is itself a security, and any investment contract attached to it, would get nothing from the exemptions or the safe harbor.

Two more limits sit inside the text. Rule 104 would import a bad actor disqualification regime patterned on Regulation A, under which issuers and specified associated persons could lose access to the exemptions over securities-related convictions, orders, judgments, suspensions or bars. And the preemption of state securities registration and qualification requirements would run through Rule 500, which defines certain purchasers as qualified purchasers, covering offerings under the new rules and certain secondary market transactions.

Whether that package survives contact with 149 questions is now the comment period's job to test. The date to watch is Oct. 20, 2026, and the evidence will be in what the SEC leaves in and what it cuts before any final rule arrives. A final rule's timing, and the chance of an extension, are not stated in anything the agency has published so far.