SEC proposes Reg Crypto with $75M exemption for crypto investment contracts

The U.S. Securities and Exchange Commission has proposed two registration exemptions for certain crypto investment contracts under a new Regulation Crypto framework, including a $75 million annual fundraising pathway.

The SEC said in an Aug. 18 press release that Regulation Crypto Assets, or Reg Crypto, would create a tailored framework for qualifying investment contracts involving digital assets. The proposal follows the Commission's March 2026 interpretation of how federal securities laws apply to crypto assets and related transactions.

Under the first exemption, an eligible issuer could offer up to $5 million in crypto investment contracts over four years without completing standard registration under the Securities Act of 1933. The route targets smaller projects that need capital while still complying with the framework's conditions.

A second exemption covers offerings of up to $75 million during any 12-month period. Issuers using the larger pathway face extra obligations, including audited financial statements and continued reporting after the offering closes.

Both routes require issuers to provide narrative disclosures based on principles the proposed rules specify. The Commission said issuers would need to make "certain principles-based narrative disclosures" available to investors.

The SEC did not present either exemption as an automatic exclusion for all token sales. Each route applies to qualifying crypto investment contracts and depends on compliance with the stated conditions. The release does not suggest that every crypto asset or transaction becomes exempt from federal securities law.

Before the proposal emerged, the Commission scheduled an Aug. 14 open meeting to consider the offering framework. The agency later canceled that meeting because of what it called an unforeseen scheduling issue and did not immediately provide a replacement date.

The rulemaking package had already entered the White House review process under RIN 3235-AN38 before the meeting was canceled, crypto.news reported. Publication of the proposal now moves the plan into the public rulemaking process rather than putting the exemptions into immediate effect.

Alongside the two offering exemptions, Reg Crypto proposes a conditional safe harbor from the term "investment contract" within the definitions of a security under the Securities Act of 1933 and the Securities Exchange Act of 1934.

Under the proposal, a crypto asset initially connected to an investment contract could cease to receive that treatment when the arrangement satisfies the safe harbor's conditions. The framework addresses the legal agreement surrounding a token rather than treating the asset as permanently tied to one securities classification.

The approach follows the SEC's March interpretation, which addressed when a crypto asset may be sold as part of an investment contract and when that contractual relationship may end. The SEC and Commodity Futures Trading Commission presented that guidance as a complement to congressional work, not a replacement for legislation.

For U.S. token issuers, the distinction affects how projects could structure fundraising and later transactions. Investors would receive different levels of information depending on which exemption the issuer uses, with the $75 million pathway requiring financial statements and ongoing reports.