SEC Regulation Crypto Assets, the proposed rulemaking published in the Federal Register on 21 August 2026, creates the clearest US pathway yet for public token fundraising, but the lawyers who have read it closely are keeping their expectations calibrated.
The proposal structures its offering exemptions across two tiers. According to the SEC’s own fact sheet, Tier 1 permits offerings of up to $20 million in any 12-month period (capped at $6 million from affiliated selling securityholders), while Tier 2 permits up to $75 million (with a $22.5 million affiliate ceiling). A separate, one-time startup exemption covers early-stage distributions including airdrops and staking rewards, with no financial statement requirement and no resale restrictions under Rule 144.
The public comment period closes on 20 October 2026.
What SEC Regulation Crypto Assets Actually Permits
The 12-month rolling structure of the Tier 2 exemption is where the fundraising mechanics get interesting. Drew Hinkes, partner at Winston & Strawn, tells Magazine the limitation would allow for ‘serial raises’ of $75 million every 12 months, ‘provided they are actually distinct offerings.’
That means a project seeking $225 million in total could, in principle, raise it in three annual tranches, returning each time with a more developed network and, arguably, a higher token valuation to justify the next round.
Lilya Tessler, partner at Sidley’s Global FinTech and Blockchain group, adds the caveat: each raise ‘isn’t automatic.’ Issuers must file a new offering statement, undergo SEC staff review, and disclose what was raised in the prior 12 months so the cap can be verified. Tier 2 issuers must also provide financial statements audited to US GAAS or PCAOB standards, per the full proposed rule text. Ongoing reporting uses forms designated Form 1-CRYPTO, Form 1-KC, Form 1-SC, and Form 1-UC.
One structural angle worth noting for venture-backed projects: Fenwick & West observes that the fundraising exemption could allow companies to raise up to $75 million by pre-selling tokenised usage credits or platform access, without issuing equity. That reframes it as a potential non-dilutive financing tool sitting alongside, not instead of, a traditional cap table.
The SEC press release further notes the rules would preempt state securities law registration requirements for qualifying offerings and certain secondary market transactions, which removes one of the historically significant compliance headaches for US-based issuers.
Access to the Tier 2 exemption is not universal. Per Benesch Law’s analysis, issuers must be US-organised entities, with a majority of executive officers or directors who are US citizens or residents, more than 50% of assets located in the United States, and business principally administered in the United States. Offshore-first projects looking to tap US retail will need to restructure first.
The Security / Non-Security Grey Zone Has Not Gone Away
The proposal does include an investment contract safe harbor: if an issuer certifies to the SEC that it has ceased all essential managerial efforts promised under an investment contract and meets certain other conditions, the Commission would no longer treat the associated crypto asset as subject to an investment contract, per Chairman Paul Atkins’s statement on the proposal.
That exit mechanism matters because the alternative is messy. Hinkes flags a live risk: if a secondary market transaction transfers an investment contract from seller to buyer, ‘there is a risk that the sale of the crypto asset would be viewed as a securities transaction.’ Exchanges and trading venues inherit that exposure.
Lee Reiners, a Duke University lecturing fellow and financial regulation expert, is direct about the regulatory arbitrage risk: ‘A public offering exemption could become a vehicle for regulatory arbitrage […] A token issuer may satisfy the formal conditions for an exempt sale while continuing to market an asset whose value depends heavily on the issuer’s managerial efforts.’ The result for retail, he argues, would be familiar: opaque disclosures, concentrated insider holdings, and aggressive promotion.
Non-accredited investors face an explicit participation cap regardless of round: Tessler notes they are limited to buying 10% of the greater of their income or net worth in any offering under the proposal.
As for volume, the SEC estimates roughly 99 offerings per year under the startup exemption and 31 under the fundraising exemption, totalling 130 annually. Approximately 475 issuers are expected to use the investment contract safe harbor each year. That is a measured expansion, not a reopening of the floodgates. Up to 90% of ICO-era projects between 2017 and 2019 failed, and Reiners notes that fundraising markets are ‘shaped by investor appetite, token economics, liquidity, custody, and the reputational damage left by the last ICO cycle.’ That context does not disappear because a new exemption exists.
The Morgan Lewis alert defines the core legal concept: a ‘covered investment contract’ requires that the crypto asset itself is not a security, that no other asset is subject to the contract, and that the asset is subject to the investment contract. Where a token sits on that spectrum post-launch is still a fact-specific determination, not an automatic safe pass.
The comment window closes 20 October 2026. How the SEC responds to pushback on the security / non-security boundary will determine whether this framework actually lands, or becomes another patchwork that the next wave of issuers simply routes around.
