The Securities and Exchange Commission on August 18, 2026 proposed Regulation Crypto Assets (Reg CA), establishing the first standalone offering framework for crypto investment contracts in U.S. securities law. The 400-page proposal creates two registration exemptions — a startup track capped at ...
"Today, we are charting a new course with a package of exemptions that would facilitate capital formation and allow crypto asset innovation to flourish in the United States in the years ahead." — Paul Atkins, SEC Chairman
The Securities and Exchange Commission on August 18, 2026 proposed Regulation Crypto Assets (Reg CA), establishing the first standalone offering framework for crypto investment contracts in U.S. securities law. The 400-page proposal creates two registration exemptions — a startup track capped at $5 million over four years and a tiered fundraising track permitting up to $75 million annually — alongside a conditional safe harbor that lets issuers self-certify when a token ceases to be a security. Comments close October 20.
The proposal arrives at a peculiar moment. Commissioner Hester Peirce, architect of the Crypto Task Force and the intellectual progenitor of the safe harbor concept dating to her 2020 Token Safe Harbor, announced on September 25 that she will resign effective October 2. That leaves Chairman Atkins and Commissioner Mark Uyeda as the agency's only two seated commissioners to finalize a rule that reshapes how $6.81 billion in quarterly crypto fundraising interfaces with federal securities law.
This report compares Reg CA's mechanics to existing offering exemptions (Regulation A, Regulation D, Regulation CF), examines the safe harbor's structural limitations, and assesses the proposal's interaction with the EU's Markets in Crypto-Assets Regulation (MiCA) and the failed CLARITY Act.
Regulation Crypto Assets creates three exempt offering pathways for "covered investment contracts" — defined as investment contracts where the crypto asset component may eventually separate from the contract itself.
Startup Exemption. Issuers may raise up to $5 million over a non-renewable four-year period. No financial statements are required. Disclosure is principles-based and narrative in form. The exemption covers capital raises, airdrops, and network incentive distributions. Bad-actor disqualification provisions, modeled on Regulation A, apply.
Fundraising Exemption, Tier 1. Issuers may raise up to $20 million per 12-month period. Unaudited financial statements are required. Ongoing reporting obligations mirror those in Regulation A. The offering statement is filed on new Form 1-CRYPTO and must be qualified by the SEC before sales begin.
Fundraising Exemption, Tier 2. Issuers may raise up to $75 million per 12-month period. Audited financial statements are mandatory. Non-accredited investors face investment limitations of 10% of the greater of annual income or net worth — a restriction applied to both tiers, unlike Regulation A, which imposes this cap only on Tier 2. Ongoing semiannual and current reporting obligations apply.
All three pathways require antifraud compliance under Sections 10(b) and 17(a). The proposal poses 154 numbered questions to commenters, signaling the SEC's own uncertainty about critical design choices.
The following table maps the proposed Reg CA pathways against existing federal exemptions:
| Feature | Reg CA Startup | Reg CA Tier 1 | Reg CA Tier 2 | Reg A Tier 2 | Reg CF | Reg D 506(c) | |---|---|---|---|---|---|---| | Max Raise | $5M / 4 yrs | $20M / 12 mo | $75M / 12 mo | $75M / 12 mo | $5M / 12 mo | Unlimited | | Financials | None | Unaudited | Audited | Audited | Reviewed | Varies | | Non-Accredited | Permitted | Permitted | Permitted (capped) | Permitted (capped) | Permitted (capped) | Not permitted | | SEC Qualification | No | Yes | Yes | Yes | No | No | | Ongoing Reporting | Terminal filing | Yes | Yes | Yes | Yes | No | | State Preemption | Yes | Yes | Yes | Yes (Tier 2) | Partial | Yes |
The most direct comparison is to Regulation A Tier 2, which shares the $75 million ceiling and qualification requirement. The key divergence is disclosure architecture: Reg CA mandates principles-based, crypto-specific disclosure rather than the standardized financial reporting of Form 1-A. Davis Polk characterizes this as borrowing "the machinery of Regulation A" while adapting the substance to "the unique aspects of crypto assets."
Regulation CF ($5 million cap, no SEC qualification) aligns with Reg CA's startup exemption in scale but not mechanics. Reg D 506(c) remains the unlimited-raise option but excludes non-accredited investors entirely — a non-starter for token distributions requiring broad participation.
The practical effect: projects raising under $5 million gain a compliance pathway that did not previously exist outside of Reg D (accredited-only) or Reg CF (platform-intermediated). Projects raising $20-75 million get a crypto-native alternative to Reg A that does not require them to retrofit traditional disclosure formats.
The proposal's most consequential and contested provision is the investment contract safe harbor, which codifies and expands the SEC's March 2026 interpretive guidance on when a crypto asset "separates from" its underlying investment contract.
The mechanism works as follows: an issuer that has completed or permanently ceased all "essential managerial efforts" promised to investors may file a new Form TR with the SEC. Upon filing, the covered investment contract is deemed to have "ceased to exist," and the underlying crypto asset is no longer classified as a security for purposes of the Securities Act and Exchange Act.
The problems are structural. Davis Polk notes three:
Conflict of interest. The issuer self-certifies, creating an inherent conflict. The pivotal determination — whether managerial efforts have truly ended — is internal to the party with the most to gain from a favorable answer.
No reliance protection. The proposal offers "no express reliance protection to persons trading" the asset after a Form TR filing. Courts, state regulators, and private litigants remain free to argue the asset is still a security. The SEC itself retains authority to challenge any certification after the fact.
Investment Company Act gap. The safe harbor applies only to Securities Act and Exchange Act definitions. It does not address Investment Company Act registration requirements, leaving issuers potentially exposed to a separate regulatory regime.
Davis Polk's conclusion is blunt: policymakers should "excise Howey from U.S. crypto regulation...root and branch" rather than build elaborate structures atop a 1946 standard that was designed for Florida citrus groves, not programmable tokens.
Regulation Crypto Assets proposes to preempt state securities law registration and qualification requirements for both primary offerings and secondary market transactions conducted under the new framework.
This provision collides with an active campaign by state attorneys general to preserve enforcement authority. On September 14, a coalition led by New York AG Letitia James — comprising 18 attorneys general from Arizona, California, Connecticut, Delaware, Illinois, Kansas, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, Ohio, Virginia, Washington, Wisconsin, and the District of Columbia — sent a letter to Senate leadership opposing the CLARITY Act's federal preemption provisions. Their argument: state-level authority is essential to prosecuting crypto fraud, and federal preemption would strip states of tools used in over $2 billion in enforcement actions and settlements since 2020.
While the AG letter targeted the CLARITY Act (which died 49-50 in the Senate), the same preemption concerns apply to Reg CA. If the SEC finalizes the proposed state preemption, projects operating under the new exemptions would be exempt from state blue-sky law registration — a significant jurisdictional shift that the AG coalition is positioned to challenge.
Commissioner Hester Peirce announced her resignation on September 25, effective October 2 — eighteen days before the Reg CA comment period closes on October 20. She will join Regent University School of Law as an associate professor in November.
Peirce's departure is more than symbolic. She chaired the SEC's Crypto Task Force, and the Reg CA safe harbor traces its intellectual lineage directly to her February 2020 Token Safe Harbor proposal. She was the agency's most persistent advocate for clear crypto rules across three chairmanships — Clayton, Gensler, and Atkins.
Her exit leaves the SEC with two commissioners — the bare minimum quorum. Chairman Atkins and Commissioner Uyeda must now shepherd a 400-page proposed rule through a comment period that has already attracted 18 pre-comment letters and a 21-state AG coalition response, without the commissioner who designed the core framework.
The institutional risk is straightforward: a two-commissioner SEC is one recusal or illness away from losing quorum entirely. No commissioner nominees are pending Senate confirmation.
The SEC's proposal and the EU's MiCA regulation, fully operative since July 1, 2026, represent fundamentally different approaches to the same problem.
MiCA establishes a single, harmonized EU-wide regime. It classifies crypto assets into three categories — Asset-Referenced Tokens, E-Money Tokens, and other crypto-assets — and requires Crypto-Asset Service Providers (CASPs) to obtain authorization or cease regulated operations. Offering exemptions exist for raises under EUR 1 million, offers to fewer than 150 persons per member state, or offers solely to qualified investors. Licensed entities receive an EU-wide passport.
Reg CA takes a perimeter-based approach, layering crypto-specific exemptions onto the existing Securities Act framework. It does not create a new asset classification scheme. It does not establish a licensing or passporting regime for intermediaries. And it relies on the Howey test — a fact-intensive, case-by-case inquiry — to determine which assets fall within its scope.
The practical divergence: a European project knows from day one whether its token is an ART, EMT, or other crypto-asset and what rules apply. A U.S. project must first determine whether its token is part of an "investment contract" under Howey, then navigate the appropriate exemption tier, then eventually self-certify via Form TR when managerial efforts end — all while lacking binding reliance protection.
Regulation Crypto Assets represents a structural shift in the SEC's approach to crypto — from enforcement-first to rulemaking-first. The proposal's architecture is sophisticated: three offering tiers, principles-based disclosure, and a safe harbor pathway that attempts to solve the decades-old problem of when a token stops being a security.
But the proposal inherits the limitations of the framework it builds upon. The Howey test was not designed for programmable, self-executing protocols. Self-certification creates conflicts. The lack of reliance protection introduces secondary market uncertainty. And state preemption invites political and legal opposition.
The question is not whether Reg CA is an improvement over the status quo — it is. The question is whether layering crypto exemptions onto 1933 Securities Act infrastructure produces durable regulation or a temporary patch. The comment period will test that question. The two remaining commissioners will answer it.