The Securities and Exchange Commission on Tuesday proposed Regulation Crypto Assets, a new framework designed to create clearer pathways for raising capital through certain crypto asset offerings while maintaining investor protections under federal securities laws. The proposal arrives as the Digital Asset Market Clarity Act, known as the CLARITY Act, has stalled in the Senate, with a potential vote now pushed to September.

The initiative builds directly on the Commission’s March 2026 interpretive guidance explaining how federal securities laws apply to specific crypto assets and related transactions. Officials framed the move as a practical step to support domestic innovation while lawmakers continue work on permanent statutory rules.

Two Exemptions from Registration Requirements

Regulation Crypto Assets would establish two distinct exemptions from the registration requirements of the Securities Act of 1933 for eligible crypto investment contracts.

The first exemption would permit issuers to raise up to $5 million over a four-year period on a one-time basis. The second would allow offerings of up to $75 million in any 12-month period. Issuers relying on either exemption would need to provide principles-based narrative disclosures to investors describing the project, its structure, risks, and related details. Those using the larger exemption would face additional obligations, including the submission of financial statements and compliance with ongoing reporting requirements.

Both pathways would remain subject to standard anti-fraud and anti-manipulation provisions of the securities laws. The framework is intended to reduce barriers for crypto entrepreneurs seeking to operate and raise funds within the United States rather than offshore.

Conditional Safe Harbor for Investment Contracts

A central element of the proposal is a conditional safe harbor related to the definition of an “investment contract.” Under specified conditions, certain crypto assets linked to an investment contract would no longer be treated as securities under the Securities Act of 1933 or the Securities Exchange Act of 1934.

This treatment would apply once an issuer has completed or permanently ceased the essential managerial efforts it represented or promised to undertake. The provision aims to create a pathway for tokens to transition out of securities classification as projects mature and dependence on a central team diminishes.

The rules would also preempt certain state securities registration and qualification requirements for offerings conducted under the federal exemptions, as well as specified secondary-market transactions. Officials said this federal preemption would simplify compliance by reducing the need to navigate overlapping state regimes.

Context of Legislative Delays

The proposal comes after Congress failed to advance the CLARITY Act before the August recess. Pro-crypto lawmakers had sought passage earlier, but the measure encountered resistance, including from some Democrats over the latest draft. Republican senators, among them Cynthia Lummis, have publicly criticized the delays. Senate Majority Leader John Thune has filed cloture to bring the bill up for consideration when lawmakers return in mid-September, though the remaining legislative calendar is limited before the November elections and the seating of a new Congress in 2027.

SEC Chairman Paul Atkins has repeatedly stated that legislation remains essential. In remarks accompanying the proposal, he noted that durable, future-proofed rules require congressional action so that agency measures cannot be easily reversed by a later administration. He added that the Commission continues to support delivery of the CLARITY Act.

Separately, Commodity Futures Trading Commission Chairman Michael Selig has indicated that the CFTC will proceed with its own rulemaking regardless of whether the CLARITY Act becomes law, with the goal of finalizing measures before the end of the current administration’s term. The SEC’s action also precedes a scheduled CFTC meeting addressing crypto, artificial intelligence, and prediction markets.

An earlier Commission meeting planned for August 14 to consider the crypto rules was canceled due to an unforeseen scheduling issue. The proposal was ultimately advanced through the seriatim process, under which commissioners vote individually outside a public meeting. A separate “innovation exemption” for tokenized stocks that some market participants had anticipated was not included in this package and has been delayed to avoid potential conflicts with provisions under consideration in the CLARITY Act.

Next Steps and Public Input

The proposed rules will enter a 60-day public comment period following publication in the Federal Register. Stakeholders, including investors, crypto companies, and industry groups, will have the opportunity to submit feedback before the Commission considers any final version.

Officials presented Regulation Crypto Assets as part of a broader effort to onshore crypto activity and expand access for U.S. investors under consistent federal standards. The framework does not alter the underlying application of the Howey test for determining whether a particular token sale constitutes an investment contract. Instead, it seeks to provide structured exemptions and an exit pathway once certain conditions are met.

Industry representatives have described the proposal as a constructive step that incorporates feedback previously offered by market participants, while emphasizing the continued need for comprehensive legislation to provide long-term certainty.