SEC floats "Regulation Crypto Assets" to open a legal route for certain token offerings and to end investment-contract status

Odaily Planet Daily reports that Galaxy's research director said on X the U.S. Securities and Exchange Commission on Aug. 18 proposed "Regulation Crypto Assets" (Reg Crypto), a framework designed to create a lawful path for certain tokens to be offered to the U.S. public and to establish a process for terminating the related investment contract. The proposal would apply only to crypto assets that are not themselves securities, but that were issued or sold as part of an investment contract. Tokenized stocks and bonds, and structures that link tokens to equity or other securities, would fall outside the framework. Reg Crypto lays out a four-step lifecycle: financing, disclosure, construction, and exit. It includes a one-time startup exemption allowing issuers to raise up to $5 million over as long as four years. A higher-tier exemption, modeled on Regulation A, would allow raises of $20 million or $75 million in any 12-month period. Offerings relying on these exemptions would require SEC qualification review and ongoing disclosures. For non-accredited investors, investment would be capped at 10% of annual income or net worth, whichever is higher. Issuer disclosure obligations would cover token supply and release schedules, mint-and-burn mechanisms, governance and smart-contract permissions, source code, plus commitments and progress tied to project development. Once an issuer has met or permanently ceased its construction obligations, made no new construction commitments, and filed a transition report, the associated investment contract would be treated as terminated, and the crypto asset would no longer be subject to securities laws under that investment contract. Issuers not using the proposed financing exemptions could also rely on the same safe harbor. The SEC estimates roughly 475 issuers per year would use the investment-contract safe harbor, and about 130 issuers would use the two new exemptions. Eligible offerings would not be treated as restricted securities and could be resold immediately without contractual restrictions. The proposal would also preempt state registration and qualification requirements for in-scope initial offerings and certain secondary transactions. It does not address exchanges, brokers, dealers, or custodians, and it is not positioned as a standalone exemption for tokenized securities or on-chain transactions. The comment period runs for 60 days after publication in the Federal Register. SEC Chair Paul Atkins and Commissioners Hester Peirce and Mark Uyeda issued statements in support. The piece was authored by Alex Thorn.