SEC crypto proposal pairs $5 million and $75 million exemptions with state preemption
The SEC's Regulation Crypto Assets proposal sets $5 million and $75 million offering exemptions, a conditional safe harbor and state preemption. Comments close October 20.
The Securities and Exchange Commission has proposed a framework for offerings of certain crypto assets, and public comments are due October 20, 2026. The proposal, called Regulation Crypto Assets, was issued on August 18 and published in the Federal Register on August 21. It follows a Commission interpretation from March 2026 on how federal securities laws apply to certain crypto assets and transactions.
On October 1, Chairman Atkins issued a statement on a second proposed framework covering how investment advisers and funds may hold crypto assets for clients. The two proposals address different steps, the sale of a crypto-asset investment contract and the custody of crypto assets, and both are proposals rather than adopted rules. The SEC's summaries point to the full texts for complete terms. Where those summaries do not state a term, this article does not supply one.
Two Offering Exemptions With Different Caps
The proposal would create two exemptions from Securities Act of 1933 registration for certain investment contracts involving crypto assets. The first covers one-time offerings of up to $5 million during a four-year period. The second covers offerings of up to $75 million during each 12-month period.
The SEC describes the package as a "tailored securities offering regime." The caps set the scale at which each exemption applies. The larger limit is measured in each 12-month period, while the smaller one is measured over four years, and the larger exemption is the one that carries additional requirements.
The sources do not say whether an issuer may use both exemptions in the same period, or how the two limits interact. The summaries also do not list eligibility limits, investor limits or offering restrictions for either exemption. The SEC's summary page links to the proposing release PDF for those details.
The proposal follows the Commission's March 2026 interpretation of how federal securities laws apply to certain crypto assets and transactions. The SEC lists its stated goals as clarifying when crypto assets fall within federal securities laws, reducing incentives for issuers to create and operate offshore, and expanding investment opportunities for U.S. investors with stronger, more consistent protections.
Disclosure Duties and Antifraud Rules
Under both exemptions, issuers must make principles-based narrative disclosures available to investors. Only the $75 million exemption adds a requirement to provide financial statements and to meet ongoing reporting obligations.
The sources do not list a financial statement requirement or an ongoing reporting duty for the $5 million exemption. Under that exemption, the disclosure duty described in the summaries is the narrative material.
The summaries call the disclosures principles-based but do not list the topics they must cover. The content requirements therefore cannot be set out from these sources.
Under either exemption, issuers remain subject to the securities laws' antifraud and antimanipulation provisions, according to the SEC's summary page. That page does not reproduce the language of those provisions, so this article does not describe how they would apply to a token offering.
The Conditional Safe Harbor and Its Managerial-Efforts Trigger
The proposal includes a conditional safe harbor from the term "investment contract" in the definition of "security" in both the Securities Act of 1933 and the Securities Exchange Act of 1934. If the conditions are met, a crypto asset would be deemed not subject to an investment contract for purposes of those definitions.
The safe harbor is tied to an issuer completing or permanently ceasing all essential managerial efforts it represented or promised under an investment contract. Chairman Paul Atkins said the safe harbor would apply once an issuer has completed or permanently ceased those efforts.
The conditions are not stated on the summary page. The safe harbor is conditional, so it does not apply automatically to every token sale. The sources list no condition beyond the managerial-efforts trigger, and the full proposing release would need to be checked for the rest.
State Registration Requirements Would Be Preempted
The proposal would preempt state securities registration and qualification requirements for offers and sales of securities issued under an exemption in Regulation Crypto Assets. It would also preempt those requirements for certain secondary market transactions.
The effect therefore reaches beyond the first sale. Under the proposal, state registration and qualification requirements would not apply to the covered secondary trades. The summaries refer only to registration and qualification requirements.
The summaries do not identify which secondary transactions qualify, so the scope of that element cannot be settled from these sources. Readers comparing the proposal with state rules should check the full proposing text for the definition.
“Only the $75 million exemption adds a requirement to provide financial statements and to meet ongoing reporting obligations.”
The Custody Proposal for Advisers and Funds
On October 1, 2026, Chairman Atkins issued a statement saying the Commission had proposed a crypto-specific custody framework under the Investment Advisers Act of 1940 and the Investment Company Act of 1940. The statement says the framework would give advisers and funds a compliant path for custodying crypto assets.
The proposal also includes broader updates to the existing custody rules for advisers and regulated funds. The statement says those rules have not been amended in decades and says many of their provisions predate the internet. It names the required use of permitted custodians as a key existing protection.
The statement says custodial capabilities for newly developed crypto assets may lag an asset's deployment by many months, and calls this a substantial problem the proposal is intended to address. It does not describe how the proposal would change the custodian requirements for crypto assets, and it does not set out the rule text or mechanics.
The statement places the custody proposal within a wider set of SEC actions. These include a December 2025 no-action letter for a DTC tokenization pilot, a January 2026 statement on tokenized securities, an interpretation on which crypto assets are securities, an April statement on broker-dealer registration for certain interfaces, the August 2026 Regulation Crypto Assets proposal, and a recently introduced Innovation Exemption for trading tokenized NMS stock.
Comment Timing and Open Questions
Comments on Regulation Crypto Assets are due October 20, 2026. The release is numbered 33-11434 under file number S7-2026-27, and the SEC's press release carries Release 2026-76. The rule page lists the Federal Register publication as August 21, 2026, and the comment period runs 60 days from publication, which matches the October 20 date.
The SEC's press release does not state how the Commission voted, and the rule page gives no vote count. The custody statement gives no comment deadline, Federal Register date or vote, so the two proposals cannot be compared on timing from these sources.
Both proposals are described by the agency as proposals rather than adopted rules. The sources do not say when a final rule might follow.
