The Securities and Exchange Commission's proposed Regulation Crypto Assets (Reg CA), the first permanent U.S. securities rule built specifically for digital tokens, closed its 60-day public comment period on October 20, 2026, drawing 171 submissions. Of the 165 coded letters, 70% expressed condit...
"This proposal is one step on a long road toward a clear, sensible, enforceable regulatory framework for crypto." — Hester Peirce, Former SEC Commissioner (August 18, 2026)
The Securities and Exchange Commission's proposed Regulation Crypto Assets (Reg CA), the first permanent U.S. securities rule built specifically for digital tokens, closed its 60-day public comment period on October 20, 2026, drawing 171 submissions. Of the 165 coded letters, 70% expressed conditional support, 5% offered explicit endorsement, 8% opposed the framework outright, and the remainder were mixed or procedural. The proposal creates two new offering exemptions — a $5 million startup pathway and a $75 million fundraising pathway — along with a conditional safe harbor that would allow tokens to exit securities status entirely.
The comment deadline arrived amid institutional upheaval. Commissioner Hester Peirce, who led the SEC's Crypto Task Force and championed the proposal, departed the agency on October 2 — eighteen days before the window closed. The CLARITY Act, Congress's attempt to legislate a market-structure framework, failed a Senate cloture vote on September 15. And on October 5, the Commodity Futures Trading Commission launched its own parallel rulemaking, Regulation CTX and Regulation CAM, with comments due December 14. Taken together, the developments mark a decisive shift: federal crypto policy is now being written by regulators, not legislators.
Proposed on August 18, 2026, Reg CA is a roughly 400-page rulemaking that adds crypto-specific exemptions to the Securities Act of 1933. It does not amend the Howey test or redefine what constitutes a security. Instead, it creates tailored pathways for tokens that the SEC already considers investment contracts.
Startup Exemption. A one-time exemption permitting offerings of up to $5 million over a four-year period. No SEC qualification of an offering statement is required. Open to entities, individuals, or groups. Usable only once per crypto asset.
Fundraising Exemption. A recurring, two-tier framework modeled on Regulation A:
| | Tier 1 | Tier 2 | |---|---|---| | Annual Cap | $20 million | $75 million | | Affiliate Selling Cap | $6 million | $22.5 million | | Audited Financials | Not required | Required | | SEC Qualification | Required (Form 1-CRYPTO) | Required (Form 1-CRYPTO) |
Issuers using the fundraising exemption must file a new Form 1-CRYPTO on EDGAR, which replaces traditional business-and-securities disclosure with crypto-specific topics: tokenomics, network architecture, source code access, ecosystem participants, and key-person identification. The proposal also preempts state "blue sky" registration requirements for qualifying offerings and certain secondary-market transactions.
Chairman Paul Atkins described the proposal as "the most historic step yet to modernize federal securities regulations for crypto assets." Commissioner Mark Uyeda framed it as replacing "guesswork with fixed thresholds, defined disclosure obligations, and a set of conditions that issuers can measure themselves against before they make their offering."
The SEC received 171 comment letters by the October 20 deadline, with staff coding 165 of them into five categories:
| Category | Count | Share | |---|---|---| | Explicit support | 8 | 5% | | Conditional support | 115 | 70% | | Explicit opposition | 14 | 8% | | Mixed | 3 | 2% | | Procedural / off-topic | 25 | 15% |
Nasdaq filed an endorsement calling the safe harbor a "carefully designed mechanism" and stating the disclosure tiers are "appropriately calibrated." SkyBridge Capital described the proposal as "thoughtful, measured, and long overdue."
The SEC has indicated it will continue accepting late-filed comments beyond the October 20 deadline, according to CryptoBriefing, a standard but non-binding practice in notice-and-comment rulemaking.
Davis Polk & Wardwell submitted a detailed comment letter identifying three structural weaknesses. First, the firm argued the SEC should decouple the exemptions from the Howey analysis, making them available to any developer selling eligible crypto assets without first conceding that those sales constitute investment contracts. Second, Davis Polk urged removal of the $75 million Tier 2 cap, noting that the SEC has acknowledged traditional exemptions fit crypto poorly — yet a developer needing to raise more than $75 million has no compliant alternative. Third, the firm flagged the term "essential managerial efforts," a phrase central to entry, disclosure, reporting, and exit under the proposal, as lacking the definitional clarity needed to guide prospective conduct.
The most pointed opposition came in an October 7 letter from five securities-law professors: John C. Coates (Harvard), John C. Coffee Jr. (Columbia), James D. Cox (Duke), Merritt B. Fox (Columbia), and Joel Seligman (Washington University). Writing under the banner of the "Shadow SEC," a group formed in December 2024, the professors called Reg CA "deeply flawed" and recommended the Commission withdraw and re-propose.
Their core argument: the existing exemption architecture — Section 4(a)(2), Regulation D, Regulation A, and Regulation Crowdfunding — already works. The SEC, they contended, has not made the case for treating an investment contract differently simply because it is based on a digital asset.
The professors identified specific deficiencies. They argued the startup exemption departs from nearly a century of securities-law tradition by allowing public sales without qualification. They demanded the SEC close what they termed the "Rule 104 bad actor loophole," incorporate rigorous statutory bad-actor checks, and align any safe harbor with established investor-protection standards before moving forward.
The proposal's most structurally significant provision is a conditional safe harbor under which a token can formally exit securities status. No existing U.S. securities regulation offers this mechanism.
The process requires three conditions: (1) the issuer certifies that it has completed or permanently ceased all "essential managerial efforts" it originally represented or promised, (2) the network has reached what the SEC terms "sufficient decentralization," and (3) the issuer files a Form TR on EDGAR.
Once the safe harbor is triggered, the token is no longer subject to an investment contract. Secondary-market transactions in that token would not require Securities Act registration.
The concept of "sufficient decentralization" remains the framework's most contested element. The SEC's March 2026 joint interpretation with the CFTC defined it as a crypto system that "functions and operates autonomously with no person, entity, or group of persons or entities having operational, economic, or voting control." But as Davis Polk noted in a separate analysis, the proposal "rests on a term no one can define," and decentralization remains a facts-and-circumstances determination with no bright-line test.
On October 5, 2026 — fifteen days before the Reg CA comment period closed — the CFTC published an Advanced Notice of Proposed Rulemaking (ANPRM) introducing two companion frameworks. Regulation CTX defines when retail crypto transactions fall under CFTC jurisdiction. Regulation CAM would create a new subcategory of designated contract market — a "crypto asset market" — for exchanges offering retail customers leveraged, margined, or financed crypto transactions.
Comments on the CFTC's ANPRM are due December 14, 2026.
The two agencies are now building parallel regulatory architectures without a statutory mandate from Congress to coordinate. The CLARITY Act, which would have drawn a jurisdictional line between securities (SEC) and digital commodities (CFTC), failed a Senate cloture vote on September 15, 2026. According to Baker Botts, the agencies are targeting a joint rulemaking period spanning late 2026 through 2027 to harmonize token classification and custody rules.
Reg CA addresses only the offering side. Trading, custody, and exchange regulation remain on the SEC's 2026 agenda as separate rulemakings. The CFTC's framework targets the trading side. Neither agency has proposed a unified classification taxonomy. Market participants face the prospect of compliance across two overlapping regimes with no single point of entry.
Commissioner Hester Peirce, who spent nearly nine years at the SEC and led the Crypto Task Force from its January 2025 launch, resigned effective October 2, 2026. She plans to join Regent University School of Law in November. Her departure leaves the Commission with two sitting members — Chairman Atkins and Commissioner Uyeda — well below its five-seat design.
Peirce was the architect of multiple safe-harbor proposals dating back to 2020 and the internal advocate most responsible for shifting the SEC's posture from enforcement to rulemaking. Her exit removes the agency's most experienced crypto-policy voice at the moment the proposal enters its most consequential phase: the staff review of 171 comment letters and drafting of a final rule.
A final rule is not expected before Q1 2027 at the earliest. The midterm elections on November 3 could reshape the Senate, which confirms SEC commissioners. If the administration nominates replacements for Peirce and the two remaining vacancies, confirmation timelines would depend on the composition of the new Senate.
Regulation Crypto Assets represents the most consequential shift in U.S. digital-asset policy since the SEC began applying the Howey test to token sales in 2017. For the first time, issuers have a proposed pathway to raise capital through regulated token offerings and, eventually, to exit securities status entirely. The 70% conditional-support rate suggests broad industry appetite for the framework, tempered by material concerns about the $75 million cap, the ambiguity of "essential managerial efforts," and the absence of a workable decentralization standard.
Whether Reg CA reaches final-rule status in 2027 depends on variables the SEC does not control: the midterm election results, the pace of commissioner nominations, and whether the CFTC's parallel rulemaking produces a compatible or conflicting classification scheme. The regulatory architecture is under construction. The blueprints do not yet match.