The Securities and Exchange Commission has unveiled a long-anticipated regulatory framework specifically designed for digital assets, marking a significant shift from decades of applying outdated securities rules to crypto markets.
On August 18, 2026, the Commission formally proposed Regulation Crypto Assets, known as Reg CA, targeting a defined class of investment contracts involving crypto assets referred to as “covered investment contracts.”
SEC Chairman Paul Atkins has made clear the agency is prepared to move forward under its existing authority, even if Congress does not pass comprehensive crypto market structure legislation in the near term.
The proposal builds on the SEC’s March 17, 2026, interpretive release and seeks to support crypto capital formation while preserving core investor protections embedded in federal securities laws.
Reg CA introduces two new exemptions from Securities Act registration, a startup exemption for offerings up to $5 million over four years, and a fundraising exemption for offerings up to $75 million per 12-month period modeled on Regulation A.
The fundraising exemption operates across two tiers, with Tier 1 permitting up to $20 million and Tier 2 allowing up to $75 million within a 12-month period, and permits sales to retail and non-accredited investors subject to investment limits.
A conditional safe harbor under proposed Rule 400 would allow a crypto asset to be deemed no longer subject to an investment contract once an issuer completes its essential managerial efforts and files a transition report on Form TR.
The proposal also introduces a new definition of “qualified purchaser” that would preempt state securities registration and qualification requirements for both primary offerings and many secondary-market transactions, reducing the Blue Sky compliance burden across state lines.
Whether the SEC can achieve that preemption result through rulemaking alone remains open to question, since preemption of state law ordinarily requires a clear statutory basis and the approach could invite legal challenge.
Reg CA would be codified at 17 CFR part 228 and organised into five subparts covering general rules, the startup exemption, the fundraising exemption, the investment contract safe harbor, and preemption of state law.
A “covered investment contract” is defined as an investment contract where a crypto asset is subject to the contract, the crypto asset is not itself a security, and no other asset is subject to the same contract.
This definition targets the initial coin offering-style fact pattern that has caused persistent difficulties under the Supreme Court’s test established in SEC v. W.J. Howey Co., commonly known as the Howey test.
The safe harbor under Rule 400 governs only the SEC’s administration of securities laws and does not bind private plaintiffs, who may still assert that a given crypto asset constitutes a security.
The SEC frames Reg CA as complementing “Congressional endeavors to codify a comprehensive market structure framework,” with the pending CLARITY Act still before Congress addressing exchange, broker, and dealer registration questions the proposal does not resolve.
The proposal is now subject to a 60-day public comment period beginning from its publication date in the Federal Register, after which the Commission may adopt, revise, or withdraw the framework entirely.