U.S. SEC Could Propose New Rule as Soon as This Month to Ease Crypto Startup Fundraising

The SEC has largely policed token fundraising through the Howey test since the 2017 ICO boom, forcing issuers whose sales constitute investment contracts to use securities rules designed for conventional assets. That approach pushed many projects offshore and limited U.S. participation, according to Chairman Paul S. Atkins. With Congress yet to complete a durable crypto-market framework, the agency’s move toward tailored exemptions marks a shift from enforcement-led oversight to regulated capital formation.

On Aug. 18, 2026, the SEC proposed “Regulation Crypto Assets,” offering a startup exemption of up to $5 million over four years and a separate fundraising exemption of up to $75 million in any 12 months. Both routes require tailored disclosures, while the larger exemption adds financial statements and ongoing reporting. A conditional safe harbor could end investment-contract treatment once promised essential managerial efforts are completed or permanently halted. Comments are due Oct. 20.

The SEC’s custody rules determine how registered investment advisers and investment companies safeguard client and fund assets, including crypto. A 2023 proposal under then-Chair Gary Gensler would have steered advisers toward a narrow group of “qualified custodians,” such as chartered banks or trust companies, SEC-registered broker-dealers and CFTC-regulated futures commission merchants. It drew objections over cost and access, was never finalized and was withdrawn in 2025. The issue matters because custody rules shape institutional participation while setting protections for investors’ assets.

On Aug. 25, 2026, the SEC submitted “Amendments to the Custody Rules” to the White House Office of Management and Budget for review, a preliminary step before the agency can publish a formal proposal. The public agenda classifies the item as economically significant and deregulatory, with a notice of proposed rulemaking tentatively scheduled for October 2026. Details remain undisclosed, but the SEC says the overhaul would clarify crypto custody for investment advisers and investment companies, modernize outdated provisions and remove burdens no longer needed for investor protection as market and asset-holding practices evolve.

Crypto issuers in the United States have long faced uncertainty over whether token sales qualify as investment contracts under federal securities law, exposing projects to enforcement risks and limiting access to capital. The Securities and Exchange Commission’s proposed Regulation Crypto Assets would establish its first permanent framework specifically for crypto offerings, potentially giving issuers a clearer route to market while preserving disclosure and investor-protection requirements.

The SEC proposal would create two exemption tracks for qualifying crypto asset offerings, with issuers able to raise as much as $75 million annually. It also includes a safe harbor and a process for determining that certain assets are not investment contracts, offering projects additional paths to regulatory compliance. The draft is now open for a 60-day public comment period, after which the agency may revise the provisions before considering a final rule.

Regulation Crypto Assets would create a tailored federal securities-law regime for certain investment contracts involving digital assets, giving issuers a defined route to raise capital without full registration. The proposal builds on the Securities and Exchange Commission’s March 2026 interpretation of how securities laws apply to crypto transactions. It is significant because Congress has yet to complete the CLARITY Act, leaving regulators and market participants without a durable statutory framework for oversight.

The SEC proposed the rules on Aug. 18, 2026. A one-time startup exemption would permit up to $5 million of offerings over four years, while a second exemption would allow $20 million under Tier 1 or $75 million under Tier 2 in any 12-month period. The package also includes a conditional safe harbor for when a crypto asset is no longer subject to an investment contract. Comments are due 60 days after the proposal is published in the Federal Register.

The U.S. Securities and Exchange Commission is reviewing its approval framework for novel exchange-traded funds, including nontraditional products involving cryptocurrencies, tokenized assets and event contracts. The review centers on whether such funds should qualify for an automatic approval mechanism, with implications for issuers’ listing timelines, compliance costs and investor-protection standards.

The SEC has opened a 60-day public comment period on proposed changes to U.S. rules governing novel ETFs, seeking market participants’ views on an automatic approval system and the conditions under which it should apply. The process does not mean new products will be approved immediately, but it could change the review threshold for ETFs involving cryptocurrencies and other assets. No monetary amounts or date for a final decision have been disclosed.

The US Securities and Exchange Commission has long applied securities laws to crypto token offerings, while the industry has criticized the lack of clarity over when a token constitutes an investment contract and when it can fall outside regulatory oversight. Chair Paul Atkins has therefore proposed “Regulation Crypto Assets,” combining exemptions for startups and fundraising with an investment-contract safe harbor to balance capital formation, disclosure and investor protection.

On March 17, 2026, Atkins proposed allowing startups to raise up to $5 million over a maximum of four years, with a separate exemption permitting offerings of up to $75 million in any 12-month period. The draft was submitted to the White House Office of Information and Regulatory Affairs for review in early April. On May 18, media reports said the SEC could introduce a separate “innovation exemption” as early as that week, allowing tokenized US equities to operate without full broker-dealer or exchange licenses under specified conditions.