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The Savvy Investor's Guide

SEC Regulation Crypto Assets: what the proposed rules would mean for investors

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James Heppe-Smith

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By James Heppe-Smith · 8 min read

Educational, not advice. This article explains a proposed US securities rule. It is general information, not personal financial advice, and it does not recommend buying, selling or holding any crypto asset.

What this article covers: what the SEC has proposed, what it would change for people who buy tokens, what it leaves out, the reaction for and against, and how to send the SEC a comment.

What it does not cover: stablecoins, which have their own law, and whether any particular token is a good or bad investment.

In short

  • Regulation Crypto Assets is a proposal, not a rule yet. The SEC published it on 21 August 2026, and comments close on 20 October 2026.
  • It creates two new ways to raise money by selling tokens: up to $5 million over four years for early projects, and up to $75 million a year for larger ones, each with required disclosures.
  • It sets out when a token stops being treated as a security, once its network is up and running and other conditions are met.
  • It does not deal with custody or with how crypto exchanges are regulated. Those sit with other rules and with Congress.
  • Nothing changes for holders today. Fraud rules apply either way, and the final version could look different.
  • Anyone can comment, online or by email, but every comment is published, name included.

For most of the past decade, the question of whether a token was a security in the United States was answered case by case, usually by an enforcement action after the event. Regulation Crypto Assets is the SEC’s attempt to write the answer down in advance. It arrived in August, weeks before Congress again failed to pass its own crypto market law, and it is now open for public comment.

This piece explains what the proposal would do, and what it would not. For the wider picture, including the GENIUS Act and the SEC’s earlier guidance on Bitcoin and Ether, see our guide to the US crypto regulatory picture.

What is Regulation Crypto Assets?

It is a proposed set of rules under the Securities Act, announced by the SEC on 18 August 2026 and published in the Federal Register on 21 August under file number S7-2026-27. The Federal Register notice puts the deadline plainly: “Comments should be received on or before October 20, 2026.”

SEC Chairman Paul Atkins described the aim this way: “Regulation Crypto Assets seeks to provide crypto asset entrepreneurs and market participants with clear pathways to raise capital under the federal securities laws.”

It builds on the SEC’s March 2026 interpretive release, which sorted crypto assets into categories and treated Bitcoin and Ether as digital commodities rather than securities. That release said how the SEC reads the existing law. This proposal would add new rules on top.

The two new ways to raise money

The proposal turns on two exemptions from full SEC registration, both for token sales that count as investment contracts.

  • A startup exemption of up to $5 million over four years, for early-stage projects. Law firm Sullivan & Cromwell notes it could also cover tokens issued by airdrop or over time as rewards to the people who run and use the network.
  • A fundraising exemption of up to $75 million in each 12-month period, with more strings attached: financial statements and continuing reports.

Both come with disclosure duties. Issuers would have to explain the material points of the offering, the token, the people behind it and their conflicts of interest, how the network and its code work, the token’s supply and economics, governance and the risks. Sullivan & Cromwell quotes the proposed standard: “Disclosure must be presented in clear, concise, and understandable language and must be consistent with the issuer’s public statements.”

For a buyer, that last clause may be the most useful line in the whole proposal. It would put a legal hook on the gap between what a project says on social media and what it says in its paperwork.

When a token would stop being a security

The proposal also includes a safe harbour. Once a token’s network is functional and other conditions are met, the token would no longer be treated as the subject of an investment contract. The original sale may have been a securities offering, but trading in the token afterwards would not be.

This is the part that matters most for ordinary holders, because it decides which rulebook applies to the token in your account years after its launch. It is also the part critics like least, as the reaction below shows.

For qualifying offerings, the framework would also override state securities law. That is a big change in who gets to police a token sale.

What the proposal does not cover

Much of the coverage blurs this. Regulation Crypto Assets is about raising money and disclosure, and that is all. It does not:

  • Set custody rules, meaning how your crypto is held for you. On 1 October 2026 the SEC proposed separate custody rules for investment advisers and regulated funds. That proposal was published in the Federal Register on 6 October 2026, and comments on it close on 7 December 2026. The existing SEC accounting guidance is explained in our wider guide.
  • Regulate crypto exchanges or brokers. How trading platforms are supervised is the subject of the CLARITY Act in Congress and a separate rulemaking by the Commodity Futures Trading Commission.
  • Deal with stablecoins, which the GENIUS Act covers. See our guide to US stablecoin rules.
  • Remove fraud protections. The anti-fraud and anti-manipulation rules still apply whether or not an offering uses one of the new exemptions.

The SEC’s September crypto FAQ

A month after the proposal, on 25 September, the SEC’s Division of Corporation Finance issued new staff FAQs on crypto assets, and it revised one answer three days later. The Block summed up the first version: “token buybacks, network upgrades and marketing claims don’t automatically turn a crypto asset into a security.”

On upgrades, the staff wrote that “once a crypto system is functional, services to secure, maintain, improve, or enhance such a system or its functionality” would not count as the kind of managerial effort that makes something an investment contract. On buybacks, the answer as revised on 28 September covers a system that is functional “and has no central party”. There, announcing a buyback would not count as a promise of managerial effort. The same may not hold for a network that isn’t working yet, or one that still has a central party, or where a buyback is being sold as a source of returns.

Two cautions. The FAQ is staff guidance, not a Commission rule, and it doesn’t change the law. And it is separate from Regulation Crypto Assets: it interprets the existing test rather than adding to the proposal.

Who supports it, and who doesn’t

The proposal went through without dissent, but that says as much about who sits on the Commission as about the proposal itself. The SEC had three commissioners when it voted, all Republican. Caroline Crenshaw, the last Democrat and a long-standing crypto sceptic, left in January 2026. Hester Peirce has since resigned, and as at 4 October 2026 the SEC’s website lists two: Chairman Paul Atkins and Commissioner Mark Uyeda.

Commissioner Mark Uyeda said the proposal “would provide rules that crypto entrepreneurs and market participants can rely on.” Commissioner Hester Peirce called it “one step on a long road toward a clear, sensible, enforceable regulatory framework for crypto,” and invited the industry to push back: “The exemptions and safe harbor we are proposing today will not fit every model, and we want to hear your feedback.”

The sharpest criticism so far comes from Lee Reiners, a lecturing fellow at Duke University School of Law, writing on the FinReg Blog two days after the proposal. His verdict on the process: “Welcome to policymaking by crypto, for crypto.” On the startup exemption, he argues that it “discards all those compensating protections at once,” meaning the safeguards that usually limit who can put money into early-stage ventures. On the self-certification behind the safe harbour: “This is a recipe for chaos, not clarity.” And on the override of state law, he says it would “substantially weaken state regulators’ ability to stop fraudulent and abusive crypto offerings.”

Both sides agree on one thing. The current system, where the answer arrives through enforcement, has been a poor way to run a market.

Where this leaves the CLARITY Act

The SEC isn’t waiting for Congress, and the proposal doesn’t depend on it. On 15 September the Senate vote to move the CLARITY Act forward failed 49 to 50. The underlying support was 50, because Senator Thom Tillis switched to no at the end so that he could file a motion to reconsider, which keeps the bill alive. The Senate’s calendar shows a state work period, when senators are away from Washington, from 5 October to 6 November. A vote after the November midterms, in the lame-duck session, is now seen as the likeliest window.

Until then, the rules for crypto in the US are being written by the agencies under the powers they already have. Regulation Crypto Assets is the SEC’s part of that, and the CFTC is working on the trading side.

What it means if you hold crypto

For now, nothing changes. This is a proposal, and the final rule may look different after the comments are in. If it goes through largely as written, the most visible change for a buyer would be more standard paperwork on new token sales, and a clearer line on when a token has left the securities regime. The protection you would lose, on the critics’ reading, is the power of state regulators to step in on qualifying offerings.

Readers in the UK are on a different track entirely. The FCA is building its own authorisation regime for crypto firms, with dates running into 2027. Our UK crypto regulation guide sets out the timetable.

How to comment before 20 October

Anyone can comment on an SEC proposal. It doesn’t need to be long or technical. Quote the file number, S7-2026-27, and use any of these:

  • Online: the SEC’s comment form for Regulation Crypto Assets.
  • Email: rule-comments@sec.gov, with S7-2026-27 in the subject line.
  • Post: to the Secretary of the Commission at the SEC’s Washington address, quoting the file number.

Be aware that comments are published on the SEC’s website, including your name and anything personal you put in them. The comment form isn’t for reporting fraud, which has its own route.

Frequently asked questions

Is Regulation Crypto Assets in force?

No. It is a proposal. The comment period closes on 20 October 2026, after which the SEC can finalise it, change it or drop it.

Does it make Bitcoin or Ether a security?

No. The SEC’s March 2026 interpretive release already treated Bitcoin and Ether as digital commodities. This proposal is about new token sales and when other tokens leave securities status.

How much can a project raise under the new exemptions?

Up to $5 million over four years under the startup exemption, and up to $75 million in each 12-month period under the fundraising exemption, which also needs financial statements and ongoing reports.

Does it change how crypto exchanges are regulated?

No. Exchange and broker regulation is the subject of the CLARITY Act and a separate CFTC rulemaking. This proposal covers raising money and disclosure.

Will my comment be public?

Yes. The SEC publishes comments, including the commenter’s name and any personal details included in the text.

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