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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 200, 201, 228, 230, 232, and 239

[Release Nos. 33-11434; 34-106150; File No. S7-2026-27]

RIN 3235-AN38

Regulation Crypto Assets

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule.

SUMMARY: The Securities and Exchange Commission (“Commission”) is proposing new rules

to create a tailored offering regime for certain investment contracts involving crypto assets. The

proposed offering regime is intended to facilitate capital formation and accommodate innovation

within the crypto asset markets while, at the same time, ensuring that investors are adequately

protected and provided with the information they need to make informed investment decisions.

The proposed rules would be set forth in a new regulation titled “Regulation Crypto Assets” and

would include two exemptions from the registration requirements of section 5 of the Securities

Act of 1933. The first exemption would permit offerings of up to $5 million during a four-year

period. The second exemption would permit offerings of up to $75 million during each 12-month

period. Under both exemptions, issuers would be required to make certain principles-based

narrative disclosures available to their investors. In addition, issuers under the second exemption

would be required to provide financial statements and would be subject to ongoing reporting

requirements. Issuers that rely on these exemptions would remain subject to the antifraud and

antimanipulation provisions of the Federal securities laws. The proposed rules also would

include a conditional safe harbor from the term “investment contract” in the definitions of

“security” in the Securities Act of 1933 and the Securities Exchange Act of 1934. If the

conditions of that proposed safe harbor are satisfied, then a crypto asset would be deemed not to

be subject to an investment contract for purposes of those definitions of “security.”

DATES: This release was published in the Federal Register on August 21, 2026. Comments

should be received on or before October 20, 2026.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic comments:

•

Use the Commission’s internet comment form (https://www.sec.gov/comments/s7-202627/regulation-crypto-assets).

•

Send an email to rule-comments@sec.gov. Please include File Number S7-2026-27 on

the subject line.

Paper comments:

•

Send paper comments to Vanessa A. Countryman, Secretary, Securities and Exchange

Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number S7-2026-27. This file number should be

included on the subject line if email is used. To help the Commission process and review your

comments more efficiently, please use only one method of submission. The Commission will

post all submitted comments on its website (https://www.sec.gov/rules-regulations/publiccomments/s7-2026-27). Do not include personal identifiable information in submissions; you

should submit only information that you wish to make available publicly. The Commission may

redact in part or withhold entirely from publication submitted material that is obscene or subject

to copyright protection.

Studies, memoranda, or other substantive items may be added by the Commission or staff

to the comment file during this rulemaking. A notification of the inclusion in the comment file of

any such materials will be made available on the Commission’s website. To ensure direct

electronic receipt of such notifications, sign up through the “Stay Connected” option at

www.sec.gov to receive notifications by email.

A summary of the proposal of not more than 100 words is posted on the Commission’s

website (https://www.sec.gov/rules-regulations/2026/08/s7-2026-27).

FOR FURTHER INFORMATION CONTACT: Patrick Faller, Special Counsel, Office of

Chief Counsel, at (202) 551-3500, John Fieldsend, Special Counsel, Office of Rulemaking, at

(202) 551-3430, or Irene Paik, Attorney-Advisor, Office of Crypto Assets, at (202) 551-2076,

Division of Corporation Finance, U.S. Securities and Exchange Commission, 100 F Street NE,

Washington, DC 20549.

SUPPLEMENTARY INFORMATION: We are proposing amendments to or proposing to add

the following rules and forms: 1

Commission Reference

Organization; Conduct and

Ethics; and Information

Requests

Rules of Practice

Regulation Crypto Assets

Securities Act of 1933

(“Securities Act”) 2

Regulation S-T

Rule 30-1

CFR Citation

(17 CFR)

§ 200.30-1

Rule 431

Rule 100 through 500

Rule 152

§ 201.431

§§ 228.100 through 228.500

§ 230.152

Rule 175

Form 1-CRYPTO

Form 1-KC

Form 1-SC

Form 1-UC

Form TR

Form NOR

Rule 101

§ 230.175

§ 239.600

§ 239.601

§ 239.602

§ 239.603

§ 239.604

§ 239.605

§ 232.101

The text of the forms listed in this table are located in the appendices of this release.

15 U.S.C. 77a et seq.

TABLE OF CONTENTS

I. INTRODUCTION .................................................................................................................... 7

A. The Commission’s Regulatory Approach to Crypto Assets ............................................. 10

1. Approach Before 2025 ................................................................................................ 10

2. Developments Beginning in 2025............................................................................... 13

B. Written Input Provided to the Crypto Task Force ............................................................ 19

1. Security Status ............................................................................................................ 21

2. Scoping Out ................................................................................................................ 23

3. Public Offerings .......................................................................................................... 25

4. Safe Harbor from Registration .................................................................................... 27

C. Summary of the Proposed Rules ....................................................................................... 28

II. DISCUSSION OF PROPOSED RULES ................................................................................ 30

A. Regulation Crypto Assets and General Rules (Subpart A, Rules 100 through 104) ........ 30

1. Definitions (Rule 100) ................................................................................................ 32

2. General Provisions (Rule 101) .................................................................................... 41

3. Inflation Adjustment for Offering Limits (Rule 102) ................................................. 46

4. Disclosure Requirements (Rule 103) .......................................................................... 48

5. Disqualification (Rule 104)......................................................................................... 66

B. Startup Exemption (Subpart B, Rule 200) ........................................................................ 70

1. Background ................................................................................................................. 71

2. Proposed Rule ............................................................................................................. 74

C. Fundraising Exemption (Subpart C, Rules 300 through 307)........................................... 96

1. Background ................................................................................................................. 96

2. Proposed Rules.......................................................................................................... 103

D. Investment Contract Safe Harbor (Subpart D, Rule 400) ............................................... 161

1. Background ............................................................................................................... 162

2. Proposed Rules.......................................................................................................... 163

E. Preemption of State Registration and Qualification Requirements (Definition of

“Qualified Purchaser” in Subpart E, Rule 500) .............................................................. 169

1. Background ............................................................................................................... 170

2. Proposed Rule ........................................................................................................... 175

III. OTHER MATTERS.............................................................................................................. 182

IV. ECONOMIC ANALYSIS .................................................................................................... 183

A. Economic Baseline.......................................................................................................... 187

1. Current Methods of Raising up to $75 Million in Capital ........................................ 188

2. Affected Issuers ........................................................................................................ 197

3. Disclosures Provided by Current Issuers of Crypto Asset-Related Offerings .......... 209

4. Affected Financial Intermediaries............................................................................. 211

B. Economic Effects of Individual Provisions .................................................................... 212

1. Benefits and Costs of Proposed Regulation Crypto Assets ...................................... 216

2. Benefits and Costs of the Proposed Startup Exemption ........................................... 242

3. Benefits and Costs of the Proposed Fundraising Exemption .................................... 244

4. Benefits and Costs of the Proposed Investment Contract Safe Harbor .................... 252

5. Benefits and Costs of the Proposed Preemption of State Registration and

Qualification Requirements ...................................................................................... 254

C. Effects on Efficiency, Competition, and Capital Formation........................................... 259

1. Effects on Efficiency................................................................................................. 259

2. Effects on Competition ............................................................................................. 261

3. Effects on Capital Formation .................................................................................... 262

D. Reasonable Alternatives.................................................................................................. 264

E. Request for Comment ..................................................................................................... 277

V. PAPERWORK REDUCTION ACT ..................................................................................... 279

A. Background ..................................................................................................................... 279

B. Estimate of Issuers .......................................................................................................... 280

1. Startup Exemption .................................................................................................... 281

2. Fundraising Exemption ............................................................................................. 282

3. Investment Contract Safe Harbor.............................................................................. 282

C. Estimate of Issuer Burdens ............................................................................................. 283

1. Startup Exemption .................................................................................................... 283

2. Fundraising Exemption ............................................................................................. 291

3. Form TR .................................................................................................................... 296

4. Form ID ..................................................................................................................... 303

D. Collections of Information are Mandatory ..................................................................... 305

E. Confidentiality ................................................................................................................ 305

F. Retention Period of Recordkeeping Requirements ......................................................... 306

G. Request for Comment ..................................................................................................... 306

VI. PRESENT VALUES AND ANNUALIZED VALUES OF MONETIZED BENEFITS AND

COSTS .................................................................................................................................. 307

VII. CONGRESSIONAL REVIEW ACT .................................................................................. 311

VIII. INITIAL REGULATORY FLEXIBILITY ACT ANALYSIS.......................................... 311

A. Reasons for, and Objectives of, the Proposed Action..................................................... 312

B. Legal Basis ...................................................................................................................... 313

C. Small Entities Subject to the Proposed Rules ................................................................. 313

D. Projected Reporting, Recordkeeping, and Other Compliance Requirements ................. 314

E. Duplicative, Overlapping, or Conflicting Federal Rules ................................................ 315

F. Significant Alternatives .................................................................................................. 315

G. Request for Comment ..................................................................................................... 317

STATUTORY AUTHORITY .................................................................................................... 318

INTRODUCTION

We are proposing new rules to create a tailored offering regime for certain investment

contracts involving crypto assets. 3 We refer to those investment contracts throughout this release

as “covered investment contracts.” 4 The proposed offering regime is intended to facilitate capital

formation and accommodate innovation within the crypto asset markets while, at the same time,

ensuring that investors are adequately protected and provided with the information they need to

make informed investment decisions.

Since the advent of Bitcoin in 2008, 5 the crypto asset markets have grown significantly. 6

Although still only a fraction of the size of the global debt and equity markets, 7 the rapid rise in

the market capitalization of crypto assets is one of several indicators of the growing importance

of crypto assets to the global financial system.

Despite this growth, the Commission has not to date adapted its rules to address the

unique aspects of the crypto asset markets. Instead, the Commission generally has looked to the

Under the proposed rules, the term “crypto asset” would be defined to mean any digital representation of value

that is recorded on a cryptographically-secured distributed ledger. See proposed 17 CFR 228.100. The term

“distributed ledger” generally refers to databases that maintain information across a network of computers in a

decentralized or distributed manner. These networks commonly use cryptographic protocols to ensure data

integrity and consensus mechanisms to ensure data congruity. Blockchains are one type of distributed ledger,

and they are often used to issue and transfer ownership of crypto assets.

Under the proposed rules, the term “covered investment contract” would be defined to mean a contract,

transaction, or scheme that constitutes an investment contract; provided that the investment contract must meet

the following requirements: (1) a crypto asset is subject to the investment contract; (2) such crypto asset is not a

security; and (3) no asset other than such crypto asset (including any security or non-security asset) is subject to

the investment contract. See id.

See Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System (Oct. 31, 2008), available at

https://bitcoin.org/bitcoin.pdf.

See President’s Working Group on Digital Asset Markets, Strengthening American Leadership in Digital

Financial Technology 16 (July 30, 2025), available at https://www.whitehouse.gov/wpcontent/uploads/2025/07/Digital-Assets-Report-EO14178.pdf (“President’s Working Group Report”).

See Securities Industry and Financial Markets Association, 2025 Capital Markets Fact Book 8 (July 28, 2025),

available at https://www.sifma.org/wp-content/uploads/2024/07/2025-SIFMA-Capital-Markets-Factbook.pdf

(noting that in 2024, the global fixed income markets outstanding was $145.1 trillion and the global equity

market capitalization was $126.7 trillion).

test developed by the Supreme Court of the United States in SEC v. W.J. Howey Co. 8 (known as

the “Howey test” 9) to determine whether crypto assets, and transactions involving such assets,

fall within the purview of the Federal securities laws. If the Federal securities laws applied, an

issuer was required to comply with existing requirements.

Although relying on familiar and well-established legal standards in lieu of tailored rules

has some merit, this approach has two primary drawbacks in the context of crypto assets. First, it

can be difficult to apply the Howey test to crypto assets and transactions involving crypto assets.

Second, the Commission’s existing rules are not fully “fit-for-purpose” with respect to covered

investment contract offerings. Both of these issues stem from the unique attributes of crypto

assets. For example, although crypto assets may be subject to investment contracts (and,

therefore, the Federal securities laws) when first offered or sold, the crypto assets may

subsequently cease to be subject to investment contracts (at which point the Federal securities

laws no longer would apply). 10 The Commission’s existing rules generally do not contemplate or

facilitate this type of evolution. 11 Further, many of the Commission’s existing rules require

issuers to provide disclosures that may not be relevant to investors in covered investment

contract offerings. At the same time, those rules often do not elicit other types of disclosures that

are likely to be material to such investors. In addition, the value of a crypto asset (and the success

of the related network or application) often depends on the extent to which the crypto asset is

328 U.S. 293 (1946).

The Howey test is discussed in more detail in section I.A.1 below. See also Application of the Federal Securities

Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets, Release No. 3311412 (Mar. 17, 2026) [91 FR 13714 (Mar. 23, 2026)] (“2026 Interpretation”).

See id.

The fundamental nature of most non-crypto asset financial instruments does not change over time and,

therefore, they either are permanently within or outside the scope of the Federal securities laws.

widely held and used—that is, the crypto asset’s “network effects.” 12 The Commission’s existing

exemptions have features that may impede such network effects. For example, securities issued

pursuant to the Commission’s existing exemptions may be restricted securities 13 or otherwise

subject to resale restrictions. 14 Those exemptions also may limit the extent to which an issuer

may sell securities to retail investors, 15 which could result in concentrated (rather than

widespread) holdings.

Without fit-for-purpose rules, existing regulatory requirements, many of which were

adopted well before the proliferation of crypto assets, could complicate an issuer’s transaction

planning and, in turn, impede capital formation and innovation in the crypto asset markets.

Furthermore, in response to these regulatory challenges, some issuers may choose to conduct

their crypto asset transactions offshore, limiting investment options (and, therefore, the ability to

diversify) for U.S. investors or exposing them to additional risks from participating in markets

with less robust investor protections.

The Commission recently took steps to address these issues by clarifying its views on the

application of the Howey test to crypto assets and transactions involving crypto assets. 16 These

proposed rules are intended to complement those efforts. Similar to the Commission’s historical

approach of creating bespoke frameworks for certain other unique asset classes (such as asset-

See 2026 Interpretation at n.52 (stating that the term “‘network effects’ refers to the phenomenon where the

value, use, and security of a crypto system increase as more users participate and interact with the crypto

system”).

See, e.g., 17 CFR 230.144(a)(3)(ii) (providing that the term “restricted securities” incudes “[s]ecurities acquired

from the issuer that are subject to the resale limitations of § 230.502(d) under Regulation D”).

See, e.g., 17 CFR 227.501 (imposing a one-year restriction on resales of securities issued pursuant to Regulation

Crowdfunding).

See, e.g., 17 CFR 230.506(c)(2)(i) (requiring that all purchasers of securities sold in any offering under the

exemption to be “accredited investors,” as defined in 17 CFR 230.501(a)).

See 2026 Interpretation.

backed securities 17 and real estate investment trusts 18), the proposed rules would establish an

offering framework specifically tailored to covered investment contracts, thereby reducing

compliance costs for issuers and delays caused by regulatory uncertainty, while, at the same

time, ensuring that investors are adequately protected and well-informed. 19

A. The Commission’s Regulatory Approach to Crypto Assets

1. Approach Before 2025

Although the Commission and its staff began engaging with crypto assets as early as

2013, 20 the Commission first issued an analytical framework for applying the Federal securities

laws to crypto assets and crypto asset-related transactions in 2017. At that time, there was an

increased interest in capital raising transactions involving crypto assets often referred to as

“initial coin offerings” or “ICOs.” 21 One such ICO involved the issuance of crypto assets called

See, e.g., Regulation AB, 17 CFR 229.1100 through 17 CFR 229.1125.

See, e.g., 17 CFR 239.18.

While the Commission’s rules for asset-backed securities and real estate investment trusts provide a framework

for conducting registered offerings, the proposed offering framework for covered investment contracts would

provide exemptions from registration and a conditional safe harbor. This difference reflects the fact that many

crypto asset projects are intended to develop in such a way that the related crypto assets subsequently will cease

to be subject to investment contracts. See section II.B.1 (discussing the need for the proposed startup

exemption). There may be other securities involving crypto assets, such as digital securities, that are not

expected to undergo such evolution and that may be more suitable for registration. We are not, at this time,

proposing to amend our rules and forms governing registered offerings to address these other matters related to

crypto assets.

The first registration statement for the offer and sale of a crypto asset exchange-traded product was filed with

the Commission in 2013. See Form S-1 Registration Statement filed with the Commission on July 1, 2013,

https://www.sec.gov/Archives/edgar/data/1579346/000119312513279830/d562329ds1.htm.

Generally, ICOs involve the issuance of crypto assets in exchange for cash or other consideration intended to

fund the development of crypto asset networks and applications. ICOs often proceed as follows: A developer

(or a team of developers) publishes a “whitepaper” that describes the technical specifications and other relevant

details of a crypto asset project. See infra note 156 for a discussion of the term “whitepaper.” At the time of the

ICO, development of the project is in the early stages or has not yet begun and, therefore, the developer is

seeking to raise capital to fund development of the project. Based on the information provided in the

whitepaper, investors transfer cash or other consideration to the developer in exchange for crypto assets (or the

promise of a future issuance of such assets, once the project is sufficiently complete). The ICO participants

(both the developers and investors) contemplate that the project eventually will be completed, at which time the

investors may, among other things, transfer their crypto assets (sometimes referred to as “tokens”) or use them

to access certain features in the crypto asset network or application.

“DAO Tokens” by an unincorporated organization named “The DAO.” 22 In July 2017, the

Commission issued the “DAO Report,” which was a report of an investigation pursuant to

section 21(a) of the Securities Exchange Act of 1934 (“Exchange Act”) 23 with respect to the ICO

of DAO Tokens. 24 In the DAO Report, the Commission found that the ICO constituted an offer

and sale of securities subject to the Federal securities laws because, pursuant to the Howey test,

the DAO Tokens were being offered and sold as “investment contracts.” 25

In the years following the DAO Report, the Commission and its staff continued to

address ICOs (and crypto assets in general) on an ad hoc basis. 26 Consistent with the DAO

Report, the Commission’s general approach was to apply the Howey test to determine whether a

crypto asset, in the context in which it was being offered and sold, constituted or was subject to

an investment contract. If the crypto asset constituted or was subject to an investment contract,

then the issuer of the investment contract was expected to comply with the existing Federal

securities laws.

Some Commissioners and other commentators expressed concerns about the

See Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The DAO,

Release No. 34-81207 (July 25, 2017) (“DAO Report”).

15 U.S.C. 78a et seq.

See DAO Report.

See id. at 11-15. The definition of “security” in both the Securities Act and the Exchange Act enumerates

several instrument types, including “investment contract.” See 15 U.S.C. 77b(a)(1); 15 U.S.C. 78c(a)(10). The

definitions are “virtually identical” in the Securities Act and Exchange Act and are treated by the courts as

identical in “decisions dealing with the scope of the term.” Landreth Timber Co. v. Landreth, 471 U.S. 681, 686

n.1 (1985). Under the Howey test, the term “investment contract” means any contract, transaction, or scheme

whereby a person invests money in a common enterprise and reasonably expects profits to be derived from the

essential managerial efforts of others. Howey, 328 U.S. at 298-99.

See, e.g., Gladius Network LLC, Release No. 33-10608 (Feb. 20, 2019); Paragon Coin, Inc., Release No. 3310574 (Nov. 16, 2018); In re Munchee, Inc., Release No. 33-10445 (Dec. 11, 2017); Division of Corporation

Finance no-action letter to IMVU, Inc. (Nov. 19, 2020); Division of Corporation Finance no-action letter to

Pocketful of Quarters, Inc. (July 25, 2019); Division of Corporation Finance no-action letter to TurnKey Jet,

Inc. (Apr. 3, 2019).

Commission’s approach to crypto assets during this period. 27 Some described that approach as

“regulation by enforcement,” stating that the Commission pursued enforcement actions against

crypto asset issuers for alleged violations of the Federal securities laws rather than developing a

tailored regulatory framework that accommodates crypto asset innovation and

entrepreneurship. 28 Others stated that the Commission’s existing regulatory framework, which

was designed with traditional securities (e.g., stocks and bonds) in mind, is unfit for application

to covered investment contracts. 29

Similarly, during this period, the Commission received several rulemaking petitions regarding its regulatory

approach to crypto assets and transactions involving crypto assets. See, e.g., Coinbase Global, Inc., Rulemaking

petition requesting that the Commission propose and adopt rules to govern the regulation of securities that are

offered and traded via digitally native methods, including potential rules to identify which digital assets are

securities (July 21, 2022); J.W. Verret, Petition for Rulemaking to request that the Commission issue an open

call for comment from the public regarding the need for flexibility in the application of the federal securities

laws to digital assets in order to initiate an open-sourced redesign of regulations enforced pursuant to the

Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Advisers Act of 1940, and the

Investment Company Act of 1940, and other laws enforced by the SEC (Jan. 22, 2022); Vincent Molinari,

Sustainable Holdings, PBC, Request the Commission provide regulatory clarity with respect to the regulation of

a new form of digital assets – non-fungible tokens (Apr. 12, 2021); Vincent R. Molinari, Templum Markets,

LLC, Rulemaking petition on digital asset mining (Revised) (Apr. 4, 2019); Vincent R. Molinari, Templum,

Inc., Request for rulemaking to address how digital assets are regulated once a trade occurs (Dec. 12, 2018);

Vincent R. Molinari, Liquid M Capital, LLC, Rulemaking petition related to issuance of initial coin offerings

that took place prior to the promulgation of related guidance by the Commission (Jan. 26, 2018); Vincent

Molinari, Ouisa Capital, Rulemaking petition regarding the regulation of digital assets and blockchain

technology (Mar. 15, 2017). The Commission has considered these petitions in connection with the proposed

amendments, and the proposed amendments address several aspects of the petitions.

See, e.g., Commissioner Hester M. Peirce, Outdated: Remarks before the Digital Assets at Duke Conference

(Jan. 20, 2023), available at https://www.sec.gov/newsroom/speeches-statements/peirce-remarks-dukeconference-012023 (“Why not set forth a coherent legal framework in a rule? After all, if we continued with our

regulation-by-enforcement approach at our current pace, we would approach 400 years before we got through

the tokens that are allegedly securities. By contrast, an SEC rule would have universal—albeit not retroactive—

coverage as soon as it took effect.”); Commissioner Mark T. Uyeda, Remarks at the “SEC Speaks” Conference

2022 (Sept. 9, 2022), available at https://www.sec.gov/newsroom/speeches-statements/uyeda-speech-secspeaks-090922; Commissioner Mark T. Uyeda, Remarks at the “SEC Speaks” Conference 2025 (May 19,

2025), available at https://www.sec.gov/newsroom/speeches-statements/uyeda-remarks-sec-speaks-051925.

See, e.g., Brady Dale, What SEC disclosure for crypto assets could look like, AXIOS (Sept. 5, 2024), available at

https://www.axios.com/2024/09/05/crypto-blockchain-sec-disclosure-regisrations-s1. Although commentators

often referred to crypto assets that are subject to an investment contract, they did not use the term “covered

investment contracts,” as that is a new term that we are proposing to define in Regulation Crypto Assets.

Nonetheless, we believe many of the views commentators expressed would apply equally to covered investment

contracts (as we propose to define that term). For the sake of convenience and consistency, therefore, we use

that term throughout this release.

2. Developments Beginning in 2025

a. Crypto Task Force and President’s Working Group

In early 2025, the Commission’s approach to crypto assets began to shift. The

Commission’s Acting Chairman Mark T. Uyeda established a Crypto Task Force. 30 The Crypto

Task Force’s focus is to support the Commission’s efforts to draw clear regulatory lines,

appropriately distinguish securities from non-securities, craft tailored disclosure frameworks,

provide realistic paths to registration for both crypto assets and market intermediaries, ensure

that investors have the information necessary to make investment decisions, and make sure that

enforcement resources are deployed judiciously. 31 To this end, the Crypto Task Force has hosted

a series of roundtables, 32 held meetings with members of the public, 33 and solicited and received

written input from members of the public. 34 That written input is described in more detail in

section I.B below.

In addition, as part of an effort to provide greater clarity on the application of the Federal

securities laws to crypto assets, the Commission’s Division of Corporation Finance issued a

series of staff statements beginning in February 2025. These statements provided the Division’s

views regarding the application of the Federal securities laws to various crypto asset-related

See U.S. Securities and Exchange Commission, Crypto Task Force, available at

https://www.sec.gov/about/crypto-task-force.

See id.

See U.S. Securities and Exchange Commission, Crypto Task Force Roundtables, available at

https://www.sec.gov/about/crypto-task-force/crypto-task-force-roundtables.

See U.S. Securities and Exchange Commission, Crypto Task Force Meetings, available at

https://www.sec.gov/about/crypto-task-force/crypto-task-force-meetings.

See U.S. Securities and Exchange Commission, Crypto Task Force Written Input, available at

https://www.sec.gov/about/crypto-task-force/crypto-task-force-written-input.

matters, including meme coins, 35 proof-of-work mining activities, 36 stablecoins, 37 offerings and

registrations of securities in the crypto asset markets, 38 protocol staking activities, 39 crypto asset

exchange-traded products, 40 liquid staking activities, 41 and tokenized securities. 42

Further, President Donald J. Trump issued an executive order titled “Strengthening

American Leadership in Digital Financial Technology” on January 23, 2025. 43 This executive

order, among other things, established the President’s Working Group on Digital Asset Markets

See U.S. Securities and Exchange Commission, Division of Corporation Finance, Staff Statement on Meme

Coins (Feb. 27, 2025), available at https://www.sec.gov/newsroom/speeches-statements/staff-statement-memecoins. This statement and any other staff statement referenced in this release is not a rule, regulation, guidance,

or statement of the Commission, and the Commission has neither approved nor disapproved its content. Staff

statements have no legal force or effect: they do not alter or amend applicable law, and they create no new or

additional obligations for any person.

See U.S. Securities and Exchange Commission, Division of Corporation Finance, Statement on Certain Proofof-Work Mining Activities (Mar. 20, 2025), available at https://www.sec.gov/newsroom/speechesstatements/statement-certain-proof-work-mining-activities-032025.

See U.S. Securities and Exchange Commission, Division of Corporation Finance, Statement on Stablecoins

(Apr. 4, 2025), available at https://www.sec.gov/newsroom/speeches-statements/statement-stablecoins-040425.

See U.S. Securities and Exchange Commission, Division of Corporation Finance, Offerings and Registrations of

Securities in the Crypto Asset Markets (Apr. 10, 2025) (“CF Disclosure Statement”), available at

https://www.sec.gov/newsroom/speeches-statements/cf-crypto-securities-041025.

See U.S. Securities and Exchange Commission, Division of Corporation Finance, Statement on Certain

Protocol Staking Activities (May 29, 2025), available at https://www.sec.gov/newsroom/speechesstatements/statement-certain-protocol-staking-activities-052925.

See U.S. Securities and Exchange Commission, Division of Corporation Finance, Crypto Asset ExchangeTraded Products (July 1, 2025), available at https://www.sec.gov/newsroom/speeches-statements/cf-cryptoasset-exchange-traded-products-070125.

See U.S. Securities and Exchange Commission, Division of Corporation Finance, Statement on Certain Liquid

Staking Activities (Aug. 5, 2025), available at https://www.sec.gov/newsroom/speeches-statements/corpfincertain-liquid-staking-activities-080525.

See U.S. Securities and Exchange Commission, Division of Corporation Finance, Division of Investment

Management, and Division of Trading and Markets, Statement on Tokenized Securities (Jan. 28, 2026),

available at https://www.sec.gov/newsroom/speeches-statements/corp-fin-statement-tokenized-securities012826?utm_medium=email&utm_source=govdelivery; see also U.S. Securities and Exchange Commission,

Division of Trading and Markets, Frequently Asked Questions Relating to Crypto Asset Activities and

Distributed Ledger Technology (last reviewed or updated Feb. 19, 2026), available at

https://www.sec.gov/rules-regulations/staff-guidance/trading-markets-frequently-asked-questions/frequentlyasked-questions-relating-crypto-asset-activities-distributed-ledgertechnology?utm_medium=email&utm_source=govdelivery.

Exec. Order No. 14178, Strengthening American Leadership in Digital Financial Technology (Jan. 23, 2025)

[90 FR 8647 (Jan. 31, 2025)] (“Exec. Order No. 14178”).

(“President’s Working Group”)—composed of the Chairman of the Commission and the heads

of several other Federal departments agencies—and directed the President’s Working Group to

“propose a Federal regulatory framework governing the issuance and operation of digital

assets.” 44

On July 30, 2025, the President’s Working Group issued a report consisting of several

regulatory recommendations. 45 Some of those recommendations were directed at the

Commission, including that the Commission should use its rulemaking and exemptive authority

under the Securities Act to:

•

Establish a fit-for-purpose exemption from registration under section 5 of the Securities

Act for securities distributions involving digital assets; 46

•

Establish a time-limited safe harbor or exemption from certain securities law

requirements for transactions involving digital assets that may be subject to an investment

contract because they are not yet fully functional or associated with a sufficiently

decentralized 47 network to allow for progressive functionality or decentralization; and

•

Establish a safe harbor for certain airdrops from characterization as “sales” under section

2(a)(3) of the Securities Act 48 or an exemption from the corresponding registration

requirements under section 5 of the Securities Act.

On July 31, 2025, following publication of the President’s Working Group Report,

Id. at section 4(c)(i).

See President’s Working Group Report at 141-59.

The term “digital asset” is defined in the executive order as referring to “any digital representation of value that

is recorded on a distributed ledger, including cryptocurrencies, digital tokens, and stablecoins.” Exec. Order No.

14178 at section 2(a).

See President’s Working Group Report at 20 (“The term ‘decentralized’ typically refers to the use of blockchain

technologies to provide financial or nonfinancial services on a peer-to-peer basis.”).

15 U.S.C. 77b(a)(3).

Commission Chairman Paul S. Atkins announced the launch of “Project Crypto”—a

Commission-wide initiative to modernize the Federal securities rules and regulations—and

directed the Commission’s staff “to swiftly develop proposals to implement the [President’s

Working Group’s] recommendations.” 49 Among other things, Chairman Atkins directed the staff

to “work to develop clear guidelines that market participants can use to determine whether a

crypto asset is a security or subject to an investment contract” and “for those crypto asset

transactions that are subject to the securities laws, . . . to propose purpose-fit disclosures,

exemptions, and safe harbors, including for so-called ‘initial coin offerings,’ ‘airdrops,’ and

network rewards.” 50

b. 2026 Interpretation

On March 17, 2026, the Commission issued a release titled Application of the Federal

Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto

Assets (“2026 Interpretation”). 51 That release set forth an interpretation of the definition of

“security” as applied to crypto assets and transactions involving crypto assets. Among other

things, the 2026 Interpretation classified crypto assets into categories and analyzed each category

under the definition of “security.” Specifically, the release classified crypto assets into the

following five categories based on their characteristics, uses, and functions: (i) digital

commodities; (ii) digital collectibles; (iii) digital tools; (iv) stablecoins; and (v) digital securities.

The release provided the Commission’s view that digital securities are securities, stablecoins

may or may not be securities depending on their characteristics, and digital commodities, digital

Chairman Paul S. Atkins, American Leadership in the Digital Finance Revolution (July 31, 2025), available at

https://www.sec.gov/newsroom/speeches-statements/atkins-digital-finance-revolution-073125.

Id.

See 2026 Interpretation.

collectibles, and digital tools are not themselves securities. 52

The 2026 Interpretation further explained that, as with any asset that is not a security, a

non-security crypto asset can be offered and sold subject to an investment contract, which is a

security. 53 The Commission acknowledged, however, the difficulty of applying the Howey test to

crypto assets and transactions involving crypto assets and market participants’ requests for

guidance regarding the circumstances under which the Commission will characterize crypto

assets as securities and transactions involving crypto assets as securities transactions. To address

those challenges and requests, and to provide greater clarity regarding the treatment of crypto

assets under the Federal securities laws, the 2026 Interpretation addressed how non-security

crypto assets become subject to, and how they cease to be subject to, an investment contract.

With respect to how non-security crypto assets become subject to an investment contract,

the 2026 Interpretation noted that how an issuer markets and promotes a contract, transaction, or

scheme is relevant to assessing whether the issuer is offering or selling an investment contract

and thus a security. 54 That is, a non-security crypto asset becomes subject to an investment

contract when an issuer offers it by inducing an investment of money in a common enterprise

with representations or promises to undertake essential managerial efforts from which a

purchaser would reasonably expect to derive profits.

Under such circumstances, secondary market offers and sales of such a non-security

crypto asset would constitute securities transactions that must be registered under the Securities

See id. at 13717. The 2026 Interpretation also noted that there may be crypto assets that do not fall within any of

these five categories, as well as crypto assets with hybrid characteristics that may fall within more than one

category.

Id.

Id. at 13721.

Act or conducted pursuant to an available exemption from registration. The associated

investment contract will continue to be transferred to subsequent purchasers of the non-security

crypto asset in secondary market transactions until the non-security crypto asset separates from

the issuer’s representations or promises, as discussed below. Market participants should refer to

the 2026 Interpretation for a more complete discussion of the Commission’s views as to the

circumstances under which a non-security crypto asset may become subject to an investment

contract.

With respect to how a non-security crypto asset that was previously offered and sold

subject to an investment contract ceases to be subject to such investment contract, the 2026

Interpretation stated that for the non-security crypto asset to remain subject to the investment

contract, purchasers must continue to reasonably expect the issuer’s representations or promises

to engage in essential managerial efforts to remain connected to the non-security crypto asset. 55

The 2026 Interpretation also stated that, when a purchaser of a non-security crypto asset that had

been subject to an investment contract could no longer reasonably expect the issuer’s

representations or promises to engage in essential managerial efforts to remain connected to the

non-security crypto asset, the non-security crypto asset separates from such representations or

promises, and thereafter the non-security crypto asset is not subject to the Federal securities laws.

The 2026 Interpretation set forth the Commission’s view that a non-security crypto asset would

no longer be subject to an investment contract when: (1) the issuer has fulfilled its

representations or promises to engage in essential managerial efforts, or (2) the purchaser would

not reasonably expect the issuer to be able to fulfill or to continue to engage in the essential

See id. at 13722.

managerial efforts it represented or promised it would undertake. Market participants should

refer to the 2026 Interpretation for a more complete discussion of the Commission’s views as to

the circumstances under which a non-security crypto asset may separate from and cease to be

subject to an investment contract.

The 2026 Interpretation also set forth the Commission’s views regarding the investment

contract status of certain crypto asset disseminations known as “airdrops.” The Commission

noted that “[a]n ‘airdrop’ is a means for crypto asset issuers to disseminate their crypto assets in

exchange for no or nominal consideration” and discussed some of the reasons why an issuer may

conduct an airdrop. 56 The Commission then provided its interpretation with respect to airdrops of

non-security crypto assets to recipients who do not provide the issuer with money, goods,

services, or other consideration in exchange for the airdropped non-security crypto asset.

Specifically, the Commission stated that, in those circumstances, “the non-security crypto asset

does not become subject to an investment contract because the first element of the Howey test—

requiring an investment of money—is not met.” 57 Market participants should refer to the 2026

Interpretation for a more complete discussion of the Commission’s views regarding the

investment contract status of airdrops. 58

B. Written Input Provided to the Crypto Task Force

The Crypto Task Force was established on January 21, 2025 to “develop[] a

Id. at 13730 (“Issuers use airdrops for a variety of reasons, such as to generate interest in and expand ownership

and use of their crypto assets, reward early users or loyalty of users of a crypto system, promote a software

application, build a community, decentralize governance authority with respect to an open-source crypto

system, or award high-scoring players of an associated video game.”).

Id. at 13731.

See also infra note 200 and accompanying text for a discussion of airdrops in the context of the startup

exemption.

comprehensive and clear regulatory framework for crypto assets.” 59 One month later,

Commissioner Hester M. Peirce published a statement inviting input from the public on “some of

the questions with which the Task Force is wrestling.” 60 Those questions were categorized

according to the following 10 topics: (1) Security Status; (2) Scoping Out; (3) Public Offerings;

(4) Safe Harbor from Registration; (5) Trading; (6) Custody; (7) Crypto Lending; (8) Crypto

Exchange-Traded Products; (9) Tokenized Securities; and (10) Sandbox and Related

International Issues. 61

To date, the Crypto Task Force has received over 300 comment letters. 62 Commenters

include issuers, investors, law firms and legal professionals, audit and accounting professionals

and firms, academics, professional and investor associations and organizations, investment

companies and advisors, market intermediaries, service providers, network foundations, foreign

entities, other crypto asset market participants, and other members of the public. Although we

have considered all the comments received, the most relevant comments for purposes of this

proposal were those that addressed the following four topics: Security Status, Scoping Out,

Public Offerings, and Safe Harbor from Registration. We have summarized below some of the

most significant themes from the comments received on each of these topics. As discussed in

section I.A.2.b above, the Commission addressed many of the points raised by the “Security

Status” and “Scoping Out” comments in the 2026 Interpretation. Nonetheless, some of those

U.S. Securities and Exchange Commission, Crypto Task Force Designation Letter from Acting Chairman Mark

T. Uyeda (Feb. 4, 2025), available at https://www.sec.gov/files/crypto-task-force-designation-letter.pdf.

Commissioner Hester M. Peirce, There Must Be Some Way Out of Here (Feb. 21, 2025), available at

https://www.sec.gov/newsroom/speeches-statements/peirce-statement-rfi-022125 (“Cmr. Peirce Request for

Input”).

Id.

The comment letters are available at https://www.sec.gov/about/crypto-task-force/crypto-task-force-writteninput. Unless otherwise specified, all references in this release to comment letters are to the written input

submitted to the Crypto Task Force.

comments (e.g., those that express a concern about a current lack of regulatory clarity) are

relevant for the proposed rules.

1. Security Status

With respect to the “Security Status” topic, Commissioner Peirce noted that “[m]arket

participants have expressed a reasonable desire to determine with ease whether . . . [a given

crypto] asset is a security or is being offered or sold as part of an investment contract.” 63 She

further observed that “[m]arket participants have expressed concern that the Howey test, as the

Commission has applied it, is a complex analysis that can be difficult to apply consistently.” 64

To address those concerns, Commissioner Peirce stated that the Crypto Task Force was seeking

to “make it easier for investors, market participants, and the Commission to categorize crypto

assets and crypto asset transactions.” 65 The four questions in this category sought to solicit input

on this point.

Several commenters that addressed these questions stated that many crypto assets are not

themselves necessarily securities. 66 For example, one commenter stated that “crypto assets

should be viewed as commodities that may be offered and sold as securities based on an

assessment of the facts and circumstances of a particular offering, but do not intrinsically have

the characteristics of securities.” 67 At the same time, some commenters also acknowledged that

Cmr. Peirce Request for Input.

Id.

See, e.g., letters from a16z, Comments on the SEC Crypto Task Force’s Questions Concerning the Security

Status of Crypto Assets (Mar. 13, 2025) (“a16z 1”); Lewis Rinaudo Cohen (Mar. 20, 2025) (“L. Cohen”);

Nasdaq, Inc. (Apr. 25, 2025) (“Nasdaq”); Perkins Coie LLP (Apr. 23, 2025) (“Perkins Coie 1”); Ripple Labs

Inc. (Mar. 21, 2025) (“Ripple 1”); Ripple Labs Inc. (Jan. 9, 2026) (“Ripple 2”); The Digital Chamber (Apr. 28,

2025) (“TDC 1”).

Letter from Perkins Coie 1 (emphasis in original).

some crypto assets, including those referred to as “digital securities,” “tokenized securities,” or

something similar, are themselves securities. 68

Several commenters described difficulty associated with the Howey test and requested

additional clarity from the Commission regarding the application of that test to crypto assets and

transactions involving such assets. 69 One commenter expressed the view that “the [Howey] test is

subjective and has led to inconsistent and controvertible results.” 70 According to the commenter,

the Howey test’s “shortcomings are evidenced by the bevy of SEC enforcement actions taken

over the past few years, which arose from fierce disputes as to whether digital assets of varying

types constituted securities.” 71 Another commenter stated that the Howey test is unpredictable,

difficult to enforce, impractical to apply, and of uncertain bounds. 72

Further, some commenters suggested that the level of a crypto network’s decentralization

is essential for determining whether a crypto asset is the subject of an investment contract. 73

According to one commenter, “[t]he degree of centralized control and the extent of ‘ongoing

efforts’ could be used as factors to distinguish between a commodity and a security.” 74 Another

commenter stated that “[a] digital asset does not satisfy [the Howey] test when no one has

See, e.g., letters from Coinbase Global, Inc. (Mar. 19, 2025) (“Coinbase”); Nasdaq; Perkins Coie 1.

See, e.g., letters from Alternative Investment Management Association (Mar. 25, 2025) (“AIMA”); a16z 1;

Blockchain Research Lab (Feb. 18, 2025); Figure Markets (Mar. 25, 2025) (“Figure Markets”); Foley &

Lardner LLP (Mar. 20, 2025) (“Foley & Lardner”); Nasdaq. But see, e.g., letter from Lee Reiners, Lecturing

Fellow, Duke University (Mar. 21, 2025) (suggesting that the Howey test provides a viable regulatory taxonomy

for crypto assets and transactions involving such assets).

Letter from Nasdaq.

Id.

See letter from a16z 1.

See, e.g., letters from AIMA; a16z, Recommendations Regarding a Safe Harbor for Certain Airdrops and

Incentive-Based Rewards of Network Tokens (Mar. 13, 2025) (“a16z 2”); Crypto Council for Innovation (May

29, 2025) (“Crypto Council”); Jump Crypto (May 1, 2025) (“Jump Crypto”); J.W. Verret (Feb. 23, 2025);

Perkins Coie 1.

Letter from AIMA.

unilateral control over the protocol underlying the asset because, under those circumstances,

there is no ‘common enterprise’ run by a “manage[r]’ or ‘promoter.’” 75 By contrast, one

commenter stated that “‘decentralization’, while highly relevant for user confidence and the

overall success of the crypto asset sector, is not necessarily the best bright-line standard for

determining when securities law applies to crypto asset transactions.” 76 Similarly, another

commenter stated that “[b]ecause ‘decentralization’ is not a binary state, but a subjective and

often fluid continuum involving code contribution, node distribution, economic factors, and

governance participation and control, relying on it for legal classification introduces intolerable

uncertainty.” 77

Finally, several commenters recommended that the Commission clarify the application of

the Federal securities laws to certain technology functions that are inherent to a crypto

network. 78 Examples of such functions include mining, staking, and validating. One commenter

requested “guidelines that distinguish between tokens used for network operations and those

structured as investment instruments. Tokens used for staking, governance, or paying

[transaction] fees enable blockchain functionality rather than serving as investment vehicles.” 79

2. Scoping Out

Letter from Jump Crypto.

Letter from L. Cohen.

Letter from Ripple 2; see also letter from Teresa Goody Guillén (Jan, 26, 2026) (“Goody Guillén”)

(“Decentralization is multifaceted and, in some cases, borders on illusory; it is often conflated with distributed;

and it does not guarantee reduced risk or accountability. . . . The key question should not be ‘is it

decentralized’ but whether residual risk is reduced by design, and if not, how to address it.”).

See, e.g., letters from AIMA; a16z 1; Cardano Foundation (Apr. 22, 2025) (“Cardano”); Coinbase; Dragonchain

(Mar. 10, 2025) (“Dragonchain”); SIFMA (May 9, 2025) (“SIFMA 1”); TDC 1.

Letter from AIMA.

With respect to the “Scoping Out” topic, Commissioner Peirce stated that “[t]he

Commission may be able to provide greater clarity to investors and other market participants by

identifying categories of crypto assets (and transactions) that do not fall within its authority.” 80

As such, the two questions on this topic solicited input on whether “the security status of certain

categories of crypto assets [should] be addressed” and how to “establish a workable taxonomy

while remaining merit- and technology-neutral.” 81

Commenters generally agreed that it would be helpful for the Commission to clarify the

security status of different types of crypto assets and transactions involving crypto assets. 82

Many of those commenters suggested that, in determining security status, the Commission look

to the economic substance of a particular crypto asset or associated network or application rather

than the technological form of such asset, network, or application. 83 One commenter emphasized

“the importance of adopting a principles-based approach that is merits-based, technology-neutral,

focuses on the economic substance and risks of specific digital assets (rather than their

technological form), and primarily considers an asset’s function as the basis of determining its

status as a security.” 84 Another commenter suggested not “fixat[ing] on classification” but

“regulating residual risk across three axes: agency risk, derivative risk, and market-integrity

risk.” 85

Cmr. Peirce Request for Input.

Id.

See, e.g., letters from AIMA; Cardano; Edward Lee (Apr. 1, 2025); Ethena Labs, S.A. (June 11, 2025); Figure

Markets; Foley & Lardner; Josh Lawler (Mar. 17, 2025) (“J. Lawler”); National Society of Compliance

Professionals (Sept. 8, 2025); SIFMA 1; Polsinelli PC (on behalf of The Digital Chamber) (June 27, 2025).

See, e.g., letters from AIMA; Cardano; SIFMA 1.

Letter from SIFMA 1.

Letter from Goody Guillén.

3. Public Offerings

With respect to the “Public Offerings” topic, Commissioner Peirce stated that “[p]eople

who have conducted or attempted to conduct registered or qualified token offerings have

expressed frustration about the cost and feasibility of registration.” 86 Commissioner Peirce

further noted that “[t]okens and their issuers can differ significantly in some aspects from

traditional securities and their issuers.” 87 Accordingly, Commissioner Peirce’s statement

solicited input on several aspects of this topic, including whether the Commission should

develop tailored disclosure requirements for covered investment contracts and whether

Regulation A “provide[s] a useful vehicle to conduct offerings” of covered investment

contracts. 88

Several commenters suggested that the Commission’s existing offering regimes,

including the related disclosure requirements, are unfit for application to covered investment

contracts and their issuers. 89 For example, some commenters expressed the view that the

Cmr. Peirce Request for Input.

Id.

Id. Although commenters often referred to crypto assets that are subject to an investment contract when

providing feedback to the Crypto Task Force, they did not use the term “covered investment contracts,” as that

is a new term that we are proposing to define in Regulation Crypto Assets. Nonetheless, we believe many of the

views commenters expressed would apply equally to covered investment contracts (as we propose to define that

term). For the sake of convenience and consistency, therefore, we use that term throughout this release,

including when describing commenter input.

See, e.g., letters from a16z 2; a16z (May 1, 2025) (“a16z 3”); AIMA; Anderson P.C. (May 12, 2025)

(“Anderson”); L. Cohen; Coinbase; CoinList (July 9, 2025) (“CoinList”); Crowdfunding Professional

Association (June 13, 2025) (“CfPA”); Figure Markets; Global Digital Assets and Cryptocurrency Association

(May 16, 2025) (“GDCA”); J. Lawler; Nasdaq; SIFMA (June 11, 2025) (“SIFMA 2”); The Digital Chamber

(June 26, 2025) (“TDC 2”). One commenter conducted a survey of 2,000 self-identified crypto asset investors.

See letter from Broadridge Financial Solutions (Apr. 29, 2025) (“Broadridge”). The results of that survey “show

that individuals regard traditional types of disclosure information as important in making and monitoring crypto

investments,” including “information on risks, financial overview, management, and governance.” Id. The

commenter further noted that “[b]y contrast, survey respondents rated information on tokenomics,

network/platform activity, and perspective of the core team lower in importance.” Id. (emphasis in original).

Commission’s current disclosure framework is not tailored to elicit the types of information that

are likely to be material to investment decisions with respect to covered investment contracts. 90

As such, several commenters shared recommendations regarding the types of information that

the Commission should mandate if it were to adopt a tailored disclosure regime with respect to

crypto assets. 91 The information they recommended for disclosure includes the ecosystem and

governance mechanism with respect to a crypto asset, plans of development for a crypto network

or allocation, and source code security. 92

In addition, several commenters generally supported Regulation A as a potential starting

point or model for a covered investment contract offering framework. 93 Some commenters,

however, identified certain features of Regulation A that either make it ill-suited or unavailable

for covered investment contract offerings. Commenters noted, for example, that Regulation A is

available only with respect to offerings of equity securities, debt securities, and equity-related

convertible securities. 94 Commenters also pointed to the difficulty of complying with State

securities laws with respect to securities purchased in Regulation A offerings, including because

The commenter concluded, however, that these survey results “suggest[] that [the surveyed investors] are

unaware of the importance of other relevant information that is helpful in evaluating and monitoring

investments in these asset classes.” Id. As a result, the commenter stated that “[t]ailored disclosures, together

with greater financial literacy education, can support robust growth in the crypto asset markets, and protect

investors by affording them high levels of innovation and greater choice.” Id.

See, e.g., letters from a16z 3; AIMA; Anderson; Broadridge; CfPA; L. Cohen; Coinbase; GDCA; Nasdaq; TDC

See, e.g., letters from a16z 3; Ava Labs Inc. (Sept. 3, 2025); CfPA; Coinbase; GDCA; Joon Kim (Mar. 6, 2025)

(“J. Kim”); Nasdaq; SIFMA 2.

See, e.g., letter from Coinbase.

See, e.g., letters from a16z 3; CfPA; DealMaker (May 30, 2025) (“DealMaker”); Figure Markets; CrowdCheck

Law (Mar. 19, 2025) (“CrowdCheck Law”); Nasdaq; TDC 2.

See, e.g., letters from CrowdCheck Law; TDC 2. Eligible securities under Regulation A are defined as “[e]quity

securities, debt securities, and securities convertible or exchangeable to equity interests, including any

guarantees of such securities, but not including asset-backed securities as such term is defined in Item 1101(c)

of Regulation AB.” 17 CFR 230.261(c).

the Federal securities laws do not preempt State law with respect to secondary market

transactions in such securities. 95

4. Safe Harbor from Registration

Finally, the “Safe Harbor from Registration” topic solicited input on several aspects of a

potential “time-limited exemption from the registration requirements under the Securities Act for

offers and sales of crypto assets during the development of a blockchain project” that

Commissioner Peirce first suggested in 2020. 96 Among other things, this potential exemption

would “provide network developers with a grace period within which, under certain conditions,

they can facilitate broad participation in and the development of a functional or decentralized

network.” 97 At the end of this grace period, “token transactions may not be securities

transactions if the network had matured into a decentralized or functioning network that is not

dependent on a single person or group to carry out the essential managerial or entrepreneurial

efforts.” 98 Commissioner Peirce’s statement solicited input on several aspects of her suggested

exemption.

See, e.g., letters from CrowdCheck Law; DealMaker.

See Cmr. Peirce Request for Input (citing Commissioner Hester M. Peirce, Token Safe Harbor Proposal 2.0

(Apr. 13, 2021) (“Cmr. Peirce Proposal 2.0”), available at https://www.sec.gov/newsroom/speechesstatements/peirce-statement-token-safe-harbor-proposal-20). Cmr. Peirce Proposal 2.0 is an updated version of

the token safe harbor proposal Commissioner Peirce originally suggested in February 2020. See Commissioner

Hester M. Peirce, Running on Empty: A Proposal to Fill the Gap Between Regulation and Decentralization

(Feb. 6, 2020) (“Commissioner Peirce, Running on Empty”), available at

https://www.sec.gov/newsroom/speeches-statements/peirce-remarks-blockress-2020-02-06).

Cmr. Peirce Request for Input.

Id.

Many commenters generally supported a potential exemption along these lines. 99 One

commenter stated that “[a] thoughtfully calibrated Safe Harbor—appropriately tailored to the

realities, risks, and opportunities of digital assets and blockchain technologies—will provide

important information to investors, eliminate information asymmetries, and protect investors,

token holders, builders, and projects operating in this space while the long-term legislative and

regulatory policymaking processes play out.” 100 Some commenters also suggested modifications

to the potential exemption. 101 For example, one commenter proposed a revised exemption with

multiple modifications, including a clarification regarding the distinction between the “utility”

path to non-security status and the “decentralization” path. 102 Another commenter suggested

modifications intended to better protect investors from projects that remain subject to centralized

control. 103

C. Summary of the Proposed Rules

In light of the concerns raised about the Commission’s approach to covered investment

contracts before 2025 (as described in section I.A.1), the regulatory developments beginning in

See, e.g., letters from Anderson; Coinbase; DeFi Education Fund (Apr. 18, 2025) (“DeFi Education Fund”);

Figure Markets; Gabriel Shapiro (Mar. 14, 2025) (“G. Shapiro”); Hedera Hashgraph LLC (June 3, 2025); J.

Kim; Jump Crypto; L. Cohen; Plume Network LLC (May 5, 2025); The Digital Chamber (May 21, 2025)

(“TDC 3”). But see, e.g., letter from CrowdCheck Law (“We believe that if an exemption under Regulation A is

available, there would be no need for a safe harbor of the kind described.”). One commenter supported the

“intent behind” the potential exemption but stated “we do not support an exemption” because the commenter

“believe[d] that legislation is ultimately necessary to foster the growth of the crypto asset industry, continued

blockchain innovation and to ensure investor protection.” Letter from DealMaker; see also letter from a16z 3

(supporting “strongly” the goal of the potential exemption but stating that “the Crypto Task Force can best

achieve its mandate by deferring this matter to Congress in the near term”). The commenter also expressed

concern that the potential exemption could “potentially encourage existing entrepreneurs who utilize Regulation

A and Regulation [Crowdfunding] to pivot to ‘token’ offerings that are entirely exempt from SEC registration

and many of the disclosure obligations that protect investors.” Letter from DealMaker.

100

Letter from DeFi Education Fund.

101

See, e.g., letters from a16z 3; DeFi Education Fund; G. Shapiro.

102

Letter from G. Shapiro.

103

See letter from a16z 3.

2025 (as described in section I.A.2), and the public input that commenters provided to the Crypto

Task Force (as described in section I.B), we are proposing new rules with respect to covered

investment contracts. 104

The proposed rules would be set forth in a new regulation titled “Regulation Crypto

Assets” 105 that would comprise the following subparts:

•

Subpart A would contain general rules, many of which would be applicable to all the

other rules in the regulation. 106 These general rules are discussed in section II.A below.

•

Subpart B would set forth an exemption from the registration requirements of section 5 of

the Securities Act 107 for certain offers, sales, and other distributions of covered

investment contracts during a period of up to four years (“startup exemption”). 108 As

discussed in more detail in section II.B below, the startup exemption would permit

offerings of up to $5 million during the four-year period.

•

Subpart C would set forth an exemption from the registration requirements of section 5 of

the Securities Act that would permit offerings of up to $75 million during each 12-month

period (“fundraising exemption”). 109 The mechanics of the fundraising exemption,

discussed in more detail in section II.C below, would be modeled, in large part, on

Regulation A 110 and would consist of two tiers with distinct offering limits.

•

Subpart D would set forth a safe harbor from the term “investment contract” in the

104

See supra note 4 for the definition of “covered investment contract” under the proposed rules.

105

See proposed 17 CFR part 228.

106

See proposed 17 CFR 228.100 through 104.

107

15 U.S.C. 77e.

108

See proposed 17 CFR 228.200.

109

See proposed 17 CFR 228.300 through 307.

110

See 17 CFR 230.251 through 263.

definitions of “security” in the Securities Act 111 and the Exchange Act 112 (“investment

contract safe harbor”). 113 As discussed in more detail in section II.D below, if the

conditions of the investment contract safe harbor are satisfied, then a crypto asset would

be deemed by the Commission not to be subject to an investment contract for purposes of

those definitions of “security.”

•

Subpart E would define “qualified purchaser” for purposes of section 18(b)(3) of the

Securities Act such that State securities law registration and qualification requirements

would be preempted with respect to offers and sales of covered investment contracts

issued pursuant to an exemption in Regulation Crypto Assets, as well as certain

secondary market transactions with respect to such covered investment contracts. This

proposed definition of “qualified purchaser” is discussed in section II.E below.

We also are proposing new forms that issuers would file with the Commission when

relying on the exemptions and safe harbor in Regulation Crypto Assets. In addition, we are

proposing conforming amendments to certain existing rules that would help implement the new

rules in Regulation Crypto Assets.

We invite and encourage interested parties to submit comments on any aspect of the

proposed rules. When commenting, please include the reasoning in support of your position or

recommendation and provide any supporting documentation or data.

II.

DISCUSSION OF PROPOSED RULES

A. Regulation Crypto Assets and General Rules (Subpart A, Rules 100 through

111

15 U.S.C. 77b(a)(1).

112

15 U.S.C. 78c(a)(10).

113

See proposed 17 CFR 228.400.

104)

Under our proposal, the rules in Regulation Crypto Assets would be set forth in part 228

of Title 17, Chapter II of the Code of Federal Regulations (“CFR”). Consolidating all the rules

into a single part titled “Regulation Crypto Assets” may facilitate compliance with the proposed

rules, especially for those issuers that are less familiar with our rules or may otherwise be unsure

where the relevant rules are located in the CFR.

Subpart A of Regulation Crypto Assets would include the following proposed rules, each

of which would be applicable to all or some of the other rules in Regulation Crypto Assets:

•

Proposed 17 CFR 228.100 (“Rule 100”), titled “Definitions of terms used in Regulation

Crypto Assets,” would set forth certain definitions that would apply to each of the

proposed rules in Regulation Crypto Assets as well as the related forms.

•

Proposed 17 CFR 228.101 (“Rule 101”), titled “General provisions,” would contain a

series of provisions generally applicable to Regulation Crypto Assets.

•

Proposed 17 CFR 228.102 (“Rule 102”), titled “Inflation adjustment for offering limits,”

would establish a process whereby the proposed offering limits would be adjusted for

inflation on an ongoing, predetermined basis without requiring the Commission to engage

in notice and comment rulemaking each time it makes those routine adjustments.

•

Proposed 17 CFR 228.103 (“Rule 103”), titled “Disclosure requirements,” would set

forth principles-based disclosure requirements that issuers would be required to satisfy

under the startup exemption and the fundraising exemption.

•

Proposed 17 CFR 228.104 (“Rule 104”), titled “Disqualification,” would condition the

availability of the startup exemption and the fundraising exemption on the issuer and

certain other related persons and insiders not being disqualified as a “bad actor,” as set

forth in 17 CFR 230.262(a) of Regulation A (“Rule 262(a)”).

These proposed rules are discussed below.

1. Definitions (Rule 100)

a. Background

Although defined terms are important in every new regulation, they are particularly

important for Regulation Crypto Assets for several reasons. As a relatively novel and highly

technological asset class, it is important that terms related to crypto assets be defined clearly so

that they can be understood by all market participants, regardless of their technological

sophistication. Given the rapid pace of innovation in the crypto asset markets, it also is important

that the terms be both accurate with respect to the current state of the technology and sufficiently

flexible to cover potential developments in the market to avoid a need to continually revisit and

update the definitions. In addition, because the rules in Regulation Crypto Assets are intended to

be tailored to offerings with respect to a specific type of security (i.e., covered investment

contracts), it is important that they be appropriately scoped to ensure that offerings of those

securities, and only those securities, are eligible to utilize these rules. Much of that “scoping”

would be accomplished through the proposed definitions in Rule 100.

b. Proposed Rule

Proposed Rule 100 would set forth certain definitions that would apply to each of the

rules in Regulation Crypto Assets as well as the related forms. The following terms would be

defined in Rule 100:

•

“Aggregate offering price” and “aggregate sales”;

•

“Associated crypto application”;

•

“Associated crypto network”;

•

“Business day”;

•

“Covered investment contract”;

•

“Covered transaction”;

•

“Crypto asset”;

•

“Final offering circular”;

•

“Related person”; and

•

“Subject crypto asset.”

In addition, Rule 100 would provide that other than these specifically defined terms (and unless

otherwise provided), the terms used in Regulation Crypto Assets (and in new forms, Form 1CRYPTO, Form 1-KC, Form 1-SC, Form 1-UC, Form TR, and Form NOR, which would be

codified at 17 CFR 239.600 through 605) will have the same meanings as in 17 CFR 230.405

(“Rule 405”), except that all references to “registrant” in those definitions will refer to the issuer

of the securities to be offered and sold under Regulation Crypto Assets.

The term “aggregate offering price” would be defined as the sum of all cash and other

consideration to be received for the covered investment contracts being offered. 114 The term

“aggregate sales” would be defined as the gross proceeds for all securities sold pursuant to other

offering statements under Regulation Crypto Assets within the 12 months before the start of, and

during, the current offering of securities. When a mixture of cash and non-cash consideration is

114

Proposed 17 CFR 228.100. The aggregate offering price or aggregate sales would include, for example,

permitted payment stablecoins received for the covered investment contracts being offered. Additionally, any

fees paid by the investor in connection with the offering that reduce the amount of consideration received by the

issuer would not count toward the offering limit. Alternatively, fees incurred by the issuer that it pays with the

proceeds of the offering would not be deducted from the offering amount for purposes of determining the

aggregate offering price or aggregate sales. These fees instead would constitute a use of proceeds and should be

described, as appropriate, in the issuer’s disclosures.

to be received, the aggregate offering price or aggregate sales would be based on the price at

which the covered investment contracts are offered for cash. Any portion of the aggregate

offering price or aggregate sales attributable to cash received in a foreign currency must be

translated into U.S. currency at a currency exchange rate in effect on, or at a reasonable time

before, the date of the sale of the covered investment contracts.

If covered investment contracts are not offered for cash, the aggregate offering price or

aggregate sales would be based on the value of the consideration as established by bona fide

sales of that consideration made within a reasonable time, or, in the absence of sales, on the fair

value as determined by an accepted standard. Valuations of non-cash consideration would be

required to be reasonable at the time made. The proposed definitions generally are consistent

with the terms as defined in 17 CFR 230.501 (“Rule 501”) of Regulation D and as used in 17

CFR 230.251 of Regulation A. The terms are primarily used in Regulation Crypto Assets to set

the offering limits in the startup exemption and the fundraising exemption.

The term “associated crypto application” would be defined to mean, with respect to a

crypto asset, the smart contract or similar executable software program that is deployed to an

associated crypto network and within which such crypto asset may be used for the transmission

or storage of value or for which the crypto asset facilitates access or participation. This term is

used throughout Regulation Crypto Assets and is intended to capture the particular application in

which a given crypto asset can be used for various functions.

The term “associated crypto network” would be defined to mean, with respect to a crypto

asset, the blockchain or similar distributed ledger technology network on which such crypto asset

is generated, minted, or mined. This term is used throughout Regulation Crypto Assets and is

intended to capture the particular network to which a given crypto asset is “native” and on which

records regarding ownership of and transactions in that crypto asset are recorded.

The term “business day” would be defined as any day except Saturdays, Sundays, or

Federal holidays. This proposed definition is consistent with the definition of “business day” set

forth in 17 CFR 230.261 of Regulation A. This term is used in several rules in Regulation Crypto

Assets, generally with respect to deadlines for making certain filings with the Commission.

As noted above, 115 the term “covered investment contract” would be defined as a

contract, transaction, or scheme that constitutes an investment contract; provided that the

investment contract must meet the following requirements: (1) a crypto asset is subject to the

investment contract; (2) such crypto asset is not a security; and (3) no asset other than such

crypto asset (including any security or non-security asset) is subject to the investment contract.

This term is used throughout Regulation Crypto Assets, as the startup exemption and the

fundraising exemption are available only for offers and sales of covered investment contracts

(i.e., issuers may not rely on those exemptions with respect to offers and sales of other types of

securities 116). Thus, to ensure that it has an appropriate scope, the definition: (1) includes

investment contracts that involve a crypto asset, 117 (2) excludes investment contracts that involve

115

See supra note 4.

116

As discussed in note 19 above, the proposed exemptions are tailored to covered investment contract offerings.

To the extent an issuer is seeking to conduct an offering of other types of securities (including investment

contracts that involve other types of securities or non-security assets other than crypto assets), we believe it

would be more appropriate to use another offering framework, such as a registered offering or an exempt

offering under Regulation A or Regulation D, that is likely better tailored to the security being offered. For

example, to the extent the security being offered is an equity security, the existing disclosure frameworks

(which contain more issuer-focused disclosures) are more likely to elicit material disclosures.

117

The term “investment contract” is not defined in Rule 100. Issuers and other market participants should refer to

the 2026 Interpretation for guidance as to whether an investment contract exists with respect to a crypto asset.

See 2026 Interpretation at 13721. The term “crypto asset” is defined in Rule 100. See supra note 3.

crypto assets that are themselves securities (e.g., digital securities 118), and (3) excludes

investment contracts that involve any asset other than a non-security crypto asset.

The term “covered transaction” would be defined as an offer, sale, or other distribution of

a covered investment contract in reliance on the startup exemption, including, but not limited to:

(1) any public or private offering, including a distribution, of a covered investment contract in

one or a series of capital raising transactions; or (2) any public or private offering, including a

distribution and transactions referred to as “airdrops,” 119 of a covered investment contract in one

or a series of transactions in exchange for, in recognition of, or as incentive for past or future use

of an associated crypto network or associated crypto application, or as a reward or incentive for

conducting activities primarily related to operating, governing, or securing an associated crypto

network or associated crypto application.

As the proposed definition suggests, the term “covered transaction” is used only in the

context of the startup exemption. While that definition would include any offer, sale, or other

distribution of a covered investment contract in reliance on the startup exemption, it also sets

forth examples of certain types of distributions. 120 These examples are meant to be illustrative

and are not intended to suggest that these are the only or preferred types of offers, sales, or

distributions of covered investment contracts that can be conducted under the startup exemption.

As noted in section I above, 121 the term “crypto asset” would be defined as any digital

118

See supra note 52 and accompanying text.

119

See infra note 200 and accompanying text for a discussion of airdrops in the context of the startup exemption.

120

See infra section II.B.2 for additional discussion of the startup exemption and the ways in which it may be used.

121

See supra note 3.

representation of value that is recorded on a cryptographically-secured distributed ledger. 122 This

term is used throughout Regulation Crypto Assets and dictates the scope of the proposed rules.

For example, the investment contract safe harbor is available only with respect to investment

contracts involving crypto assets (i.e., other types of assets may not rely on that safe harbor, even

if they are subject to an investment contract 123).

The term “crypto asset” is embedded in the definition of “covered investment contract,”

and, as previously noted in this section, the startup exemption and the fundraising exemption are

available only for offers and sales of covered investment contracts. Thus, to ensure that

Regulation Crypto Assets has an appropriately limited scope, the definition would include only

those assets for which the relevant technology (i.e., cryptographically-secured distributed ledger)

is a necessary feature.

As noted below, 124 “final offering circular” means, if the issuer is not relying on proposed

17 CFR 228.302(b) (“Rule 302(b)”), the more recent of: (1) the current offering circular

contained in a qualified offering statement; and (2) any offering circular filed pursuant to

proposed 17 CFR 228.302(f) (“Rule 302(f)”). 125 If, however, the issuer is relying on Rule

302(b), the final offering circular is the more recent of: (1) the offering circular filed pursuant to

Rule 302(f)(1) or (3); and (2) any subsequent offering circular filed pursuant to Rule 302(f). This

122

The foregoing definition of “crypto asset” is identical to the definition of “Digital Asset” in section (2)(6) of the

Guiding and Establishing National Innovation for U.S. Stablecoins Act, Pub. L. No. 119-27, 139 Stat. 419 (July

18, 2025).

123

Courts have determined that other types of non-securities, such as real estate, have been offered and sold subject

to investment contracts. See, e.g., Howey, 328 U.S. at 293 (real estate); Cont’l Mktg. Corp. v. SEC, 387 F.2d

466 (10th Cir. 1967), cert. denied, 391 U.S. 905 (1968) (beavers); Miller v. Cent. Chinchilla Grp., Inc., 494

F.2d 414 (8th Cir. 1974) (chinchillas); Glen-Arden Commodities v. Costantino, 493 F.2d 1027 (2nd Cir. 1974)

(Scotch whisky warehouse receipts).

124

See infra section II.C.2.a.iii.

125

See proposed 17 CFR 228.302(f) (requiring, among other things, an issuer to file an offering circular

supplement disclosing information previously omitted from the offering circular).

term is consistent with its definition in 17 CFR 230.261(e) of Regulation A and is used

throughout the fundraising exemption. 126

The term “related person” would mean, with respect to an issuer: founders, promoters,

employees, affiliates, and any person that is a director, officer, trustee, consultant, contractor, or

advisor to the issuer, in each case together with any immediate family member. This term is used

in proposed Rule 103 (“Disclosure requirements”). The definition is intended to include any

person that may be viewed as an “insider” of the issuer to ensure that investors are adequately

protected and informed (via the disclosure requirements in the proposed rule) about those who

are in the best position to influence the outcome of the project.

Finally, the term “subject crypto asset” would be defined as a crypto asset that is subject

to a covered investment contract. This definition is intended to reflect a key principle: for

purposes of Regulation Crypto Assets, the “security” at issue is the covered investment contract

(to which the subject crypto asset is subject) rather than the crypto asset itself. 127 Information

regarding the subject crypto asset, however, is likely to be material to an investment decision in

an offering of covered investment contracts. Thus, the term “subject crypto asset” is referred to

throughout Rule 103 (“Disclosure requirements”).

Request for Comment

1. Should we adopt Rule 100 as proposed?

2. Are there any defined terms that we either should not adopt or should change in the final

rules? If so, please identify those defined terms along with any recommended changes to

126

The terms “offering statement” and “preliminary offering circular” also are defined in 17 CFR 230.261 for

purposes of Regulation A. Although those terms also are used in the fundraising exemption, we believe they are

sufficiently self-explanatory such that it is unnecessary to define them for purposes of the fundraising

exemption.

127

See 2026 Interpretation at 13717.

the definitions.

3. Are there additional terms used in Regulation Crypto Assets that we should define?

4. Does the proposed definition of “associated crypto network” appropriately capture the

particular network to which a given crypto asset is “native” and on which records

regarding ownership and transactions in that crypto asset are recorded?

5. Does the definition of “covered investment contract” scope in the appropriate population

of securities? If not, what scope would be more appropriate?

6. The definition of “covered investment contract” would exclude investment contracts that

involve crypto assets that are securities or any other type of asset other than a nonsecurity crypto asset. Should we instead adopt a definition of “covered investment

contract” that would permit investment contracts involving assets other than a nonsecurity crypto asset to constitute a “covered investment contract” so long as they also

involve non-security crypto assets? 128 If so, should the portion of the covered investment

contract that relates to the other type of asset be able to rely on the proposed exemptions,

or should the issuer have to seek another exemption for that portion of the covered

investment contract?

7. Would permitting other types of assets to be considered part of a “covered investment

contract” have implications for the proposed approach for determining the number or

purchase price of covered investment contracts and the required disclosures about the

underlying assets in Rule 103(b)? If the rules permitted other types of assets to be

considered part of a “covered investment contract,” should there be a percentage limit on

128

This could include, for example, a single investment contract that contemplates the sale of both a crypto asset

and a share of the issuer’s stock.

the portion of the covered investment contract that relates to other types of assets and, if

so, what would be an appropriate percentage limit?

8. Are the definitions of “crypto asset,” “associated crypto application,” and “associated

crypto network” both technologically accurate today and flexible enough to

accommodate technological developments in the future? Are there other definitions of

these terms that we should use? Given how fundamental the term “crypto asset” is to this

proposal, is there a more specific definition we should consider? Is the definition too

narrow or too broad?

9. Do the proposed definitions of “aggregate offering price” and “aggregate sales” reflect

appropriate methodologies for determining the offering limits under the startup

exemption and the fundraising exemption? If not, what would be a more appropriate

methodology? Should these definitions provide greater specificity about how to convert

cash received in a foreign currency? For example, should we prescribe a specific date

and/or method of conversion? Should the issuer be required to disclose the manner in

which it converted the cash received in a foreign currency?

10. As noted previously in this section, if covered investment contracts are not offered for

cash, the aggregate offering price or aggregate sales would be based on the value of the

consideration as established by bona fide sales of that consideration made within a

reasonable time, or, in the absence of sales, on the fair value as determined by an

accepted standard. Should we establish a required standard for determining fair value

under Regulation Crypto Assets? If not, why not? If so, what should that standard be?

Should the standard be U.S. Generally Accepted Accounting Principles (“U.S. GAAP”)?

Should the rule provide a list of permitted standards?

11. Does the proposed definition of “related person” cover the appropriate scope of persons

that may be viewed as insiders of the issuer and therefore should be subject to the

relevant disclosure requirements in proposed Rule 103?

2. General Provisions (Rule 101)

a. Background

Many of the Commission’s existing offering exemptions—including Regulation A,

Regulation D, and Regulation Crowdfunding—contain general provisions that apply to the

regulations as a whole and have various functions, including clarifying the scope of the

regulations, the applicable liability standards, and general requirements or conditions to relying

on the exemptions, among other things. Regulation Crypto Assets would include several of these

general provisions, consistent with other offering exemptions. To facilitate compliance, we are

proposing to consolidate these general provisions in Rule 101.

b. Proposed Rule

Rule 101 would set forth the following provisions: Rule 101(a) (“Non-exclusive”), Rule

101(b) (“Integration”), Rule 101(c) (“Electronic filing”), Rule 101(d) (“Insignificant

deviations”), and Rule 101(e) (“Number of units and price per unit”).

Rule 101(a) would provide that attempted compliance with any exemption or safe harbor

in Regulation Crypto Assets would not act as an exclusive election. 129 That is, an issuer that

elects to avail itself of Regulation Crypto Assets would not be precluded from claiming the

availability of any other exemption from section 5 of the Securities Act or a safe harbor for

which it meets the requirements. This provision is consistent with other non-exclusivity

129

Proposed 17 CFR 228.101(a).

provisions in our existing safe harbors and exemptions, including 17 CFR 230.144A and 17 CFR

230.500(c) of Regulation D. It is intended to clarify that the startup exemption, the fundraising

exemption, and the investment contract safe harbor all are non-exclusive provisions and that an

issuer may rely on one or more of these provisions while also relying on other exemptions or

safe harbors in our rules (including existing exemptions and safe harbors or others within

Regulation Crypto Assets). 130

Rule 101(b) would provide that issuers should refer to 17 CFR 230.152 (“Rule 152”) to

determine whether offers and sales should be integrated. 131 This rule mirrors other rules in our

existing exemptions, including 17 CFR 227.100(e) of Regulation Crowdfunding, 17 CFR

230.251(c) of Regulation A, and 17 CFR 230.502(a) of Regulation D. As with those provisions,

this proposed rule is intended to remind issuers of the applicability of the integration doctrine

and Rule 152 if they are contemplating an offering under one or more of the exemptions in

Regulation Crypto Assets as well as other offerings under the Securities Act. 132 We also are

proposing conforming amendments to Rules 152(c) and (d) to clarify when an offering under an

exemption in Regulation Crypto Assets has been deemed to have commenced and when it has

been deemed to have been terminated or completed, consistent with Rule 152’s treatment of

130

An issuer’s ability to rely on several exemptions or safe harbors assumes that the requirements of each separate

exemption or safe harbor are satisfied. To the extent the issuer is relying on several exemptions either at the

same time or in close proximity, the issuer also would have to ensure that it does not run afoul of the integration

doctrine. See Facilitating Capital Formation and Expanding Investment Opportunities by Improving Access to

Capital in Private Markets, Release No. 33-10884 (Nov. 2, 2020) [86 FR 3496, 3499 (Jan. 14, 2021)]

(“Facilitating Capital Formation Release”) (“The integration doctrine seeks to prevent an issuer from

improperly avoiding registration by artificially dividing a single offering into multiple offerings such that

Securities Act exemptions would apply to the multiple offerings that would not be available for the combined

offering.”). We discuss the integration doctrine with respect to Regulation Crypto Assets below, in the context

of Rule 101(b).

131

See proposed 17 CFR 228.101(b).

132

See Facilitating Capital Formation Release at 3517.

existing exemptions (including offerings under Regulation Crowdfunding, Regulation A, and

Regulation D).

Rule 101(c) would require documents filed or otherwise provided to the Commission

pursuant to Regulation Crypto Assets to be submitted in electronic format by means of the

Commission’s Electronic Data Gathering, Analysis, and Retrieval system (“EDGAR”) in

accordance with the electronic filing rules set forth in 17 CFR part 232 (“Regulation S-T”). 133

This rule is consistent with 17 CFR 230.251(f) of Regulation A and is intended to ensure that

issuers and investors alike benefit from the efficiencies associated with electronic filing on

EDGAR. 134 We also are proposing conforming amendments to 17 CFR 232.101(a)(1) to reflect

this mandatory electronic filing requirement with respect to filings made under Regulation

Crypto Assets. 135

Rule 101(d) would provide that failure to comply with a term, condition, or requirement

of Regulation Crypto Assets would not result in the loss of any exemption under Regulation

Crypto Assets for any offer or sale to a particular individual or entity, if the person relying on the

exemption establishes that: (i) the failure to comply did not pertain to a term, condition, or

requirement directly intended to protect that particular individual or entity; (ii) the failure to

133

See proposed 17 CFR 228.101(c).

134

See, e.g., Amendments for Small and Additional Issues Exemptions Under the Securities Act (Regulation A),

Release No. 33-9741 (Mar. 25, 2015) [80 FR 21806, 21822 (Apr. 20, 2015)] (“2015 Regulation A Release”)

(“We believe the approach to electronic filing adopted today will be both practical and useful for issuers of

Regulation A securities, investors in such securities, and other market participants. Issuers will be able to

maintain better control over their filing process, reduce the printing costs associated with filings, obtain

immediate confirmation of acceptance of an offering statement, and ultimately save time in the qualification

process. Investors will gain real-time access to the information contained in Regulation A filings.”).

135

See proposed 17 CFR 232.101(a)(1)(xxxix).

comply was insignificant with respect to the offering as a whole; 136 and (iii) a good-faith and

reasonable attempt was made to comply with all applicable terms, conditions, and requirements

of Regulation Crypto Assets. 137 This rule is generally consistent with other rules in our existing

exemptions, including 17 CFR 227.502 of Regulation Crowdfunding, 17 CFR 230.260 of

Regulation A, and 17 CFR 230.508 of Regulation D. As with those provisions, this proposed rule

is intended to allow for certain insignificant deviations that can occur in the offering process

without causing the issuer to lose the exemption and incur the related consequences. 138

Finally, Rule 101(e) would specify how to determine the number of units of covered

investment contracts and the price per unit of a covered investment contract. That rule would

provide that, for purposes of determining the number of units of covered investment contracts as

required by any rule or form in Regulation Crypto Assets, one unit of a covered investment

contract would be equivalent to one unit of the subject crypto asset. Similarly, the price per unit

of a covered investment contract as required by any rule or form in Regulation Crypto Assets

should be determined by reference to the price per unit of the subject crypto asset. The rule also

136

Whether a deviation from the Regulation Crypto Assets requirements would be insignificant to the offering

would depend on the facts and circumstances of the offering and the deviation. See, e.g., Crowdfunding, Release

No. 33-9974 (Oct. 30, 2015) [80 FR 71387, 71475 (Nov. 16, 2015)] (“Crowdfunding Adopting Release”). As

noted below, proposed Rule 101(d) is modeled after similar provisions in existing exemptions, and those

provisions specify certain deviations that would be significant. See, e.g., 17 CFR 230.260 (providing that, for

purposes of Regulation A, “any failure to comply with Rule 251(a), (b), and (d)(1) and (3) . . . shall be deemed

to be significant to the offering as a whole”). We are not specifying such significant deviations in Rule 101(d)

because we believe it is appropriate to assess each particular deviation based on its particular facts and

circumstances.

137

See proposed 17 CFR 228.101(d)(1). The rule also would provide that a transaction made in reliance upon an

exemption under Regulation Crypto Assets must comply with all applicable terms, conditions, and requirements

of the exemption. See proposed 17 CFR 228.101(d)(2). Where an exemption is established only through

reliance upon Rule 101(d)(1), the failure to comply is nonetheless actionable by the Commission under section

20 of the Securities Act. See id. Finally, the rule would provide that Rule 101(d)(1) does not preclude the

Commission from bringing an enforcement action seeking any appropriate relief or a proceeding under

proposed 17 CFR 228.306 for an issuer’s failure to comply with all applicable terms, conditions, and

requirements of Regulation Crypto Assets. See proposed 17 CFR 228.101(d)(3).

138

See, e.g., Crowdfunding Adopting Release at 71474.

would set forth, as an instruction, an illustrative example stating that if an issuer sells a covered

investment contract to an investor for $100, and the covered investment contract contemplates

that the issuer will distribute 10 units of the subject crypto asset to the investor, then at the time

of the sale of the covered investment contract, the investor is deemed to have purchased 10 units

of the covered investment contract at a price of $10 per unit of covered investment contract. We

believe that specifying how to measure the number of units of covered investment contracts and

determine the price per unit of a covered investment contract would facilitate compliance and

provide clarity for market participants.

Request for Comment

12. Should we adopt Rule 101 as proposed?

13. The provisions in proposed Rule 101 would be similar to the general provisions in

several of our existing offering exemptions. Are there any provisions in Rule 101 that we

either should not adopt or that we should change in the final rules? If so, please identify

those provisions along with any recommended changes to the provisions or an

explanation as to why those provisions should not be adopted.

14. Are there any other general provisions that should apply to Regulation Crypto Assets?

Should any of the proposed general provisions not apply to one or more of the proposed

exemptions or the safe harbor in Regulation Crypto Assets?

15. Should we adopt Rule 101(a) as proposed? Alternatively, should any of the proposed

exemptions or the safe harbor in Regulation Crypto Assets act as an exclusive election?

16. Would Rule 101(b) be helpful to remind issuers of the applicability of the integration

doctrine and Rule 152? For example, would Rule 101(b)’s reference to Rule 152 provide

clarity regarding when offers and sales conducted pursuant to the exemptions in

Regulation Crypto Assets will be integrated?

17. Does Rule 101(c)’s reference to the requirements of Regulation S-T help to clarify

issuers’ electronic filing obligations?

18. Should Rule 101(d) deem the failure to comply with any particular rule in Regulation

Crypto Assets to be significant to the offering as a whole? If so, which rules should be

identified in Rule 101(d)?

19. Should we specify how to measure the number of units of covered investment contracts

and determine the price per unit of a covered investment contract as proposed in Rule

101(e)? Is the proposed method of determining the number of units of covered

investment contracts appropriate? If not, what would be a better method? Should the

price per unit of a covered investment contract be determined by reference to the price

per subject crypto asset, as proposed? If not, how should the price per unit be

determined?

3. Inflation Adjustment for Offering Limits (Rule 102)

a. Background

As discussed in more detail in sections II.B and II.C, the startup exemption and the

fundraising exemption each contain offering limits. Those limits are expressed in dollar amounts

and reflect our preliminary determination about amounts that would be appropriate to meet

issuers’ capital raising needs while maintaining adequate investor protections. Those amounts are

based on the specific purposes of each exemption as well as current economic and market

conditions. We recognize, however, that over time, the efficacy of those dollar limits could be

diluted as a result of the effects of inflation. We are proposing Rule 102 to address this

possibility by setting up a streamlined process for future inflation adjustments.

b. Proposed Rule

Under Rule 102, the Commission would periodically, but not less than once every five

years, 139 adjust the offering amount limitations in the startup exemption and the fundraising

exemption to reflect any changes in the Consumer Price Index for All Urban Consumers

published by the Bureau of Labor Statistics of the Department of Labor. 140 This proposed rule is

intended to establish a process whereby the proposed offering limits would be adjusted on an

ongoing, predetermined basis to maintain their current effectiveness without requiring the

Commission to engage in notice-and-comment rulemaking each time it makes those routine

adjustments. We would expect to implement the adjustment via a direct-to-final rulemaking. If

the Commission desired to make other adjustments to the offering limits, such as lowering the

limits or raising them beyond the effects of inflation, it could do so at any time through noticeand-comment rulemaking.

Request for Comment

20. Should we adopt Rule 102 as proposed?

21. Are there any portions of Rule 102 that we either should not adopt or that we should

change in the final rules? If so, please identify those portions of the rule along with any

recommended changes.

139

For consistency with Titles I and III of the Jumpstart Our Business Startups Act (“JOBS Act”), Public Law

112–106, 126 Stat. 306 (2012), we are proposing that the Commission adjust the offering amount limitations

every five years in manner consistent with the adjustment for emerging growth companies, see 15 U.S.C. 77b(a)

(Securities Act section 2(a)(19)) and 15 U.S.C. 78c(a) (Exchange Act section 3(a)(80)), and Regulation

Crowdfunding companies, see 15 U.S.C. 77d(a)(6) (Securities Act section 4(a)(6)) and 15 U.S.C. 77d-1(h)(1)

(Securities Act section 4A(h)(1)). See also Inflation Adjustment under Titles I and III of the JOBS Act, Release

No. 33-11098 (Sept. 9, 2022) [87 FR 57394 (Sept. 20, 2022)].

140

See proposed 17 CFR 228.102. The Consumer Price Index for All Urban Consumers is the statistical metric

developed by the Bureau of Labor Statistics of the Department of Labor to monitor the change in the price of a

set list of products. This index represents changes in prices of all goods and services purchased for consumption

by urban households. See “Consumer Price Index,” available at https://www.bls.gov/cpi.

22. Would it be more appropriate for the Commission to consider ad hoc adjustments to the

offering limits through notice-and-comment rulemaking rather than establishing an

ongoing, predetermined basis for making such adjustments?

23. Is the proposed frequency of the Commission’s adjustments under this rule (periodically,

but no less than once every five years) appropriate? Should these adjustments occur more

or less frequently?

24. Should the Commission adjust the offering limits to reflect factors other than, or in

addition to, changes in the Consumer Price Index for All Urban Consumers? If so, what

other factors would be appropriate to consider?

25. Is the proposed rule’s reference to “changes in the Consumer Price Index for All Urban

Consumers published by the Bureau of Labor Statistics of the Department of Labor” an

appropriate measure for inflation? If not, what other measure(s) should we use?

4. Disclosure Requirements (Rule 103)

a. Background

A prominent theme in submissions to the Crypto Task Force as well as other public

commentary is that the Commission’s existing disclosure requirements do not elicit the types of

information that are likely to be material to investors in covered investment contracts. 141 This

141

See, e.g., letters from a16z 2; a16z 3; AIMA; Anderson; Broadridge; L. Cohen; Coinbase; CoinList; Zack Dane

(Feb. 23, 2025) (“Z. Dane”); Figure Markets; CrowdCheck Law; J. Kim; OpenZeppelin (Apr. 16, 2025)

(“OpenZeppelin”); G. Shapiro; SIFMA 2; TDC 2; tZero Group, Inc. (Mar. 5, 2025) (“tZero”); see also

LeXpunK, Regulation X Proposal: An Exempt Offering Framework for Token Issuances (Apr. 25, 2022)

(“LeXpunK Regulation X Proposal”), available at https://github.com/LeXpunK-Army/Reg-X-Proposal-AnExempt-Offering-Framework-for-TokenIssuances/blob/main/Lexpunk%20Reg%20X%20Proposal%20FINAL%20(4.25).pdf; Justin Slaughter, Katie

Biber, and Rodrigo Seira, The Current SEC Disclosure Framework Is Unfit for Crypto (Apr. 20, 2023),

available at https://www.paradigm.xyz/2023/04/secs-path-to-registration-part-iii.

includes the disclosure requirements in 17 CFR part 229 (“Regulation S-K”) 142 and Form 1-A. 143

In the past, the Commission has adopted Regulation S-K subparts tailored to specific types of

issuers and transactions, such as Regulation M-A (mergers and acquisitions), 144 Regulation AB

(asset-backed securities), 145 subpart 1200 (oil and gas producing activities), 146 subpart 1300

(mining operations), 147 subpart 1400 (banks and savings and loans), 148 and subpart 1600 (Special

Purpose Acquisition Companies). 149 To date, however, the Commission has not considered

amendments to disclosure requirements specifically applicable to offerings of covered

investment contracts.

Several commenters expressed concern that the Commission’s existing disclosure

requirements are “inflexible,” requiring disclosure on topics that are not applicable or relevant to

offerings of covered investment contracts. 150 Commenters also stated that existing disclosure

frameworks do not elicit disclosure on a number of topics that are relevant to investors in

142

Regulation S-K was created as part of the integrated disclosure initiative to be the repository for the nonfinancial statement disclosure to be included in Securities Act registration statements and Exchange Act

periodic reports. See Adoption of Integrated Disclosure System, Release No. 33-6383 (Mar. 3, 1982) [47 FR

11380 (Mar. 16, 1982)]; see also U.S. Securities and Exchange Commission, Report on Review of Disclosure

Requirements in Regulation S–K (Dec. 2013), available at https://www.sec.gov/news/studies/2013/reg-skdisclosure-requirements-review.pdf.

143

Form 1-A sets forth the form and content requirements included in Regulation A offering statements. See Form

1-A, Regulation A Offering Statement Under the Securities Act of 1933, available at

https://www.sec.gov/files/form1a.pdf.

144

See 17 CFR 229.1000 through 17 CFR 229.1016.

145

See 17 CFR 229.1100 through 17 CFR 229.1125.

146

See 17 CFR 229.1200 through 17 CFR 229.1208.

147

See 17 CFR 229.1300 through 17 CFR 229.1305.

148

See 17 CFR 229.1400 through 17 CFR 229.1406.

149

See 17 CFR 229.1600 through 17 CFR 229.1610.

150

See supra section I.B.3; see also letter from a16z 3 (stating that “line item disclosures called for by the relevant

forms and by Regulation S-K and Regulation S-X may not always be material to purchasers of crypto assets”

and “Regulation A’s disclosure framework is modeled on traditional corporate equity offerings and is not well

suited to address the unique features of certain crypto assets”).

covered investment contract offerings, including the technical, governance, and economic

characteristics of crypto assets; description of the project; crypto asset allocations, liquidity, and

tradability; crypto asset and network security; and unique technological, market, and redemption

risks. 151 In sum, the existing disclosure frameworks, when applied to covered investment

contract offerings, may compel issuers to incur the costs of providing ultimately immaterial

disclosures while, at the same time, failing to provide investors consistently with the types of

information most important to their investment decisions. To address these concerns, we are

proposing disclosure principles that are intended to be tailored to covered investment contract

offerings and provide investors in these offerings with the information they need to make

informed investment decisions.

In developing the proposed disclosure requirements in Rule 103, we have considered a

broad range of sources. The proposed requirements were informed, in part, by the Division of

Corporation Finance’s April 2025 statement titled, “Offerings and Registrations of Securities in

the Crypto Asset Markets,” which “reflect[ed] [the staff’s] observations regarding disclosures

provided in response to existing disclosure requirements.” 152 We also considered

recommendations in academic research, public commentary, and crypto asset safe harbor

proposals from market participants. 153 Finally, a number of commenters, in their written input to

151

See, e.g., letters from a16z 3 (stating that flexible, principles-based disclosure “would result in more concise,

actionable disclosures that better promote informed decision-making and investor protection”); CfPA; GDCA;

OpenZeppelin (recommending disclosure of third-party security audits and the methodology used in those

audits); SIFMA 2; TDC 2.

152

See CF Disclosure Statement, supra note 38.

153

See Chris Brummer, Trevor I. Kiviat, and Jai Massari, What Should Be Disclosed in an Initial Coin Offering?,

in Brummer, ed., CRYPTOASSETS: LEGAL, REGUL., AND MONETARY PERSPS. (2019); Chris Brummer,

Disclosure, Dapps, and DeFi, 5 STAN. J. BLOCKCHAIN L. & POL’Y 137 (2022); Chris Brummer, A Developer

Theory of Disclosure (Spring 2025) available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5137972;

LeXPunK Regulation X Proposal, supra note 141.

the Crypto Task Force, included detailed discussion of evolving disclosure best practices and

recommendations for disclosure tailored to issuers and offerings of covered investment

contracts. 154

Some common themes emerged from those external perspectives. Notably, there

appeared to be some consensus regarding the key categories of information that should be

required under a tailored disclosure regime, including information about the following: (1) the

covered investment contract offering; (2) management, related persons, and other “material

participants”; (3) the associated crypto network or associated crypto application, including the

plan of development and the intended architecture, network protocols and functionality, and

security and source code; (4) the subject crypto asset, including total supply, distribution, and

lockup information; (5) the governance of the associated crypto network or associated crypto

application; (6) the subject crypto asset’s economics and its “ecosystem”; and (7) the material

risks relating to the covered investment contract, the subject crypto asset, and associated crypto

network or application. Proposed Rule 103 is intended to reflect these key categories as well as

additional issuer-, security-, and offering-level information that we believe is necessary to help

ensure investors in a covered investment contract offering are appropriately informed.

b. Proposed Rule

Based on the above considerations, Rule 103 would set forth principles-based disclosure

requirements with respect to offerings of covered investment contracts. We believe these

disclosure requirements would: (1) elicit material information for investors in these offerings, (2)

result in disclosures that are appropriately tailored to reflect covered investment contract issuers’

154

See, e.g., letters from a16z 3; AIMA; CfPA; Coinbase; GDCA; SIFMA 2; TDC 2.

particular facts and circumstances, (3) help investors compare covered investment contracts and

covered investment contract offerings, and (4) generally reduce disclosure costs and compliance

burdens (as compared to covered investment contract issuers’ costs and burdens when trying to

comply with existing disclosure requirements).

Rule 103(a) would set forth general disclosure principles that issuers should follow when

responding to the disclosure requirements in Rule 103(b). Rule 103(a) would state that

information provided under Regulation Crypto Assets should be tailored to the issuer, the subject

crypto asset, and the associated crypto network or associated crypto application and should be

presented in clear, concise, and understandable language, without overly relying on technical

terminology or jargon. 155 When preparing this information, each issuer would be required to

tailor its disclosure based on its own facts and circumstances. Information provided would also

be required to address the current stage of development of the issuer, the subject crypto asset,

and the associated crypto network or associated crypto application and should clearly delineate

any forward-looking or future plans of development. Information provided would be required to

be consistent with the issuer’s public statements in its established public communication

channels (such as its website or official social media accounts) and promotional materials (such

as whitepapers 156) relating to material aspects of the issuer, the subject crypto asset, and the

associated crypto network or associated crypto application. Finally, disclosure would not be

required to be provided where a particular disclosure requirement is not applicable, or responsive

155

See proposed 17 CFR 228.103(a).

156

The term “whitepaper” generally refers to a document that describes the technical aspects of a crypto asset

project (i.e., a crypto asset and the associated crypto network or associated crypto application) along with other

relevant details. See President’s Working Group Report at 31 (“Projects often disclose how their token issuance

process occurs in their whitepaper, which describes technical aspects of the project, contractual rights of the

token holders, and other pertinent details.”).

information is unknown or not reasonably available.

Rule 103(b) would set forth the disclosure requirements that issuers would be required to

comply with when relying on the startup exemption or the fundraising exemption. 157 These

disclosure requirements would cover non-financial, narrative information relating to the key

aspects of a covered investment contract offering. The disclosure requirements would be

organized into the following topics: (1) covered investment contract; (2) offering; (3) subject

crypto asset; (4) management, related persons, and conflicts of interest; (5) associated crypto

network/application; plan of development; (6) security; source code; (7) subject crypto asset

economics and allocation; (8) governance; (9) subject crypto asset ecosystem; and (10) risk

factors. 158 Each of those topics is discussed in more detail below.

In addition, as noted previously in this section, the disclosure requirements in Rule

103(b) would be principles-based requirements. That is, the rule would require the issuer to

describe the material aspects of the applicable topic without specifying detailed information that

must be provided. 159 This principles-based approach is intended to give issuers the flexibility to

tailor the disclosure to their particular facts and circumstances (and avoid compelling disclosure

of irrelevant information) while still eliciting material information for investors. It also is

intended to provide sufficient flexibility so that the proposed rules can accommodate potential

157

See proposed 17 CFR 228.103(b).

158

Information regarding the issuer will be included in Form NOR for issuers relying on the startup exemption and

in Part II of Form 1-CRYPTO for issuers relying on the fundraising exemption. Descriptions of proposed Form

NOR and proposed Form 1-CRYPTO would be codified at 17 CFR 239.605 and 17 CFR 239.600, respectively.

See infra section II.B for a more detailed discussion of the startup exemption and Form NOR. See infra section

II.C for a more detailed discussion of the fundraising exemption and Form 1-CRYPTO.

159

In contrast to some of the other subparagraphs, Rules 103(b)(1) and (2) would enumerate certain information

that an issuer must describe with respect to the covered investment contract and the offering. These enumerated

items represent key details that we believe are necessary for investors to make informed investment decisions

about the covered investment contract and the offering.

future developments in the crypto asset markets and thereby avoid the need for the Commission

to continually revisit and update the disclosure requirements.

We recognize that some market participants may prefer a different approach with respect

to the proposed disclosure requirements. For example, some investors may prefer more

prescriptive disclosure requirements that give issuers less flexibility but elicit more consistent

and comparable disclosures. In addition, notwithstanding the flexibility provided by the

principles-based approach, some issuers may prefer that we set forth detailed disclosure

requirements to help them more easily determine what information they must provide. Although

we believe our proposed requirements strike the appropriate balance, we seek comment on

potential alternative approaches, including replacing the principles-based approach with more

prescriptive disclosure requirements or, alternatively, supplementing the principles-based

requirements with non-exclusive examples of disclosure that may be responsive.

Paragraph (b)(1) – Covered Investment Contract

Rule 103(b)(1) would require the issuer to provide a description of the material terms of

the covered investment contract, including the issuer’s representations or promises to engage in

essential managerial efforts under the covered investment contract and its progress with respect

to such representations or promises, a purchaser’s obligations under the covered investment

contract, any conditions to the covered investment contract, and any other material terms.

Because the covered investment contract would be the security being offered under these

exemptions, it is important for issuers to provide investors with information about the material

terms of that security.

In addition, because the existence of the covered investment contract depends on the

issuer’s representations or promises to engage in essential managerial efforts, 160 we believe that

requiring disclosure of these representations or promises may help investors and other market

participants determine the circumstances under which the covered investment contract may cease

to exist. Furthermore, requiring the issuer to provide disclosure regarding its progress with

respect to such representations or promises will help investors and other market participants

assess, on an ongoing basis, the likelihood that the issuer will satisfy those representations or

promises. We also expect issuers may refer to this disclosure in determining whether they have

satisfied the conditions of the investment contract safe harbor, including pursuant to their

transition report obligations under the startup exemption and the fundraising exemption.

In the 2026 Interpretation, the Commission provided guidance regarding the types of

efforts that may be regarded as essential managerial efforts. For example, the Commission noted

that representations or promises by an issuer conveyed to purchasers to develop and achieve

functionality for a non-security crypto asset and/or develop an associated crypto network or

associated crypto application together with a business plan containing detailed milestones, a

timeline, information about personnel, sources of funding and other resources needed to meet

those milestones, and an explanation of how holders of the non-security crypto asset will profit

from those efforts, likely would create a reasonable expectation of profits because they speak

directly to those essential managerial efforts that affect the failure or success of the project. 161 In

contrast, the Commission stated that representations or promises that are vague or contain no

160

See 2026 Interpretation at 13721-22.

161

See id. at 13721-22.

semblance of an actionable business plan, such as those lacking milestones, funding, or other

plans for needed resources, likely would not create a reasonable expectation of profits. 162

We further note that an issuer may make other representations or promises to take certain

actions that would not constitute essential managerial efforts. For example, once an issuer has

satisfied its representations or promises to engage in essential managerial efforts under the

covered investment contract, the associated crypto network or associated crypto application may

be functional. Once such network or application is functional, it is our view that services to

secure, maintain, improve, or enhance such a network or application or its functionality, or to

facilitate network effects, whether through sponsoring or funding development projects or other

similar activities, would not constitute essential managerial efforts. As a result, any

representations or promises (whether by the issuer or another party) to provide or continue to

provide or arrange for the provision of such services after the network or application is

functional would not satisfy the Howey test. In this regard, rather than deriving its value from the

essential managerial efforts of the issuer, the relevant crypto asset should derive its value from

the programmatic operation of the associated crypto network or associated crypto application, as

well as the market’s supply and demand dynamics with respect to such crypto asset. Moreover,

after the associated crypto network or associated crypto application is functional, and the crypto

asset can be used in accordance with the programmatic utility of such network or application,

such services (whether provided or coordinated by the issuer or another party) would no longer

be among the undeniably significant ones because they would not affect the failure or success of

the associated crypto network or associated crypto application. Rather, the activities of and

162

See id.

contributions made by many parties (including, for example, the issuer, other developers,

validators and/or miners, liquidity providers, users, and holders of the crypto asset) would affect

the failure or success of the associated crypto network or associated crypto application after such

network or application is functional. Prior to functionality, however, such services are provided

or coordinated by the issuer and likely constitute essential managerial efforts.

ii.

Paragraph (b)(2) – Offering

Rule 103(b)(2) would require the issuer to provide a description of the material terms of

the offering, including:

•

The number of units of covered investment contracts to be offered, the purchase price

per unit (or how the purchase price per unit will be determined), 163 the duration of the

offering period, and any qualifications for or restrictions on purchasers in the offering;

•

Any material agreements in furtherance of the distribution of covered investment

contracts in the offering;

•

The estimated net offering sale proceeds and expenses to be paid with the offering

proceeds;

•

The intended use of proceeds from any sales in the offering; and

•

The website address at which any whitepapers or other offering materials that the issuer

prepared or distributed, either publicly or to prospective purchasers in connection with

the offering, are publicly accessible, free of charge. 164

163

See proposed 17 CFR 228.101(e) (specifying how to determine the number of units of covered investment

contracts and the price per unit of a covered investment contract).

164

See proposed 17 CFR 228.103(b)(2).

As noted in section II.A.4.a above, we believe this is fundamental information regarding the

offering that should be provided to investors to support their ability to make a well-informed

investment decision.

iii.

Paragraph (b)(3) – Subject Crypto Asset

Rule 103(b)(3) would require the issuer to provide a description of the name and the

material aspects of the subject crypto asset. 165 We expect that the value of the covered

investment contract that is being offered and sold often will depend, in large part, on investors’

perception of the subject crypto asset. Thus, the proposed rule seeks to elicit material information

regarding the subject crypto asset so that an investor can make an informed investment decision

with respect to the covered investment contract.

iv.

Paragraph (b)(4) – Management, Related Persons, and

Conflicts of Interest

Rule 103(b)(4) would require the issuer to provide a description of: (i) the material

aspects of the issuer’s management and related persons; (ii) the material aspects of any conflicts

of interest or related person transactions involving the issuer; and (iii) whether related persons

are subject to any transfer or resale restriction(s) with respect to the covered investment contract

or subject crypto asset and, if so, the material terms of such restriction(s). 166 As noted in section

II.A.4.a above, information about management, related persons, and other “material participants”

is one of the key categories of information that several commenters stated would be important

for a disclosure framework tailored to covered investment contracts. We agree that a covered

investment contract issuer should provide information to investors regarding these persons

165

See proposed 17 CFR 228.103(b)(3).

166

See proposed 17 CFR 228.103(b)(4).

because they are in the best position to influence the outcome of the project. As such,

information about these persons’ expertise and professional background, as well as arrangements

that may affect their incentives with respect to the project, is likely to be material to investors.

The proposed rule is intended to elicit information about those persons in a principles-based

manner.

In addition, covered investment contracts sold pursuant to one of the exemptions in

Regulation Crypto Assets would not be restricted securities for purposes of the Federal securities

laws. Absent a contractual or other applicable holding period or restriction, therefore, purchasers

of covered investment contracts issued under the proposed exemptions would be able to sell

those securities immediately upon acquisition. Several commenters expressed concerns about

information asymmetries and misaligned incentives between issuer “insiders” and other

investors, especially during the period after which the issuer has offered and sold covered

investment contracts but before the issuer has fulfilled its representations or promises to engage

in essential managerial efforts under the covered investment contract. 167 These commenters

recommended that any exemption include limitations on insider sales of covered investment

contracts in order to ensure investors are appropriately protected and insiders’ incentives remain

aligned with other investors. 168

167

See, e.g., letters from a16z 2; a16z 3 (“While an initial development team retains control of a network token and

its underlying network, tokenholders are at the greatest risk of harm stemming from information asymmetries

about a project, and the trust dependencies of such network token may be similar to that of an ordinary

security.”); Coinbase.

168

See, e.g., letters from a16z 3; Coinbase (recommending “[o]ther potential considerations that would apply

conditions to [an] exemption or safe harbor,” including “[a] limitation on token sales by the development team

and related parties for their own account until the network or protocol has become sufficiently decentralized.

Such a limitation would help ensure the issuer, development team and related persons have continued economic

incentive to complete the project.”).

We recognize that investor protection risks related to information asymmetries and

misaligned incentives between insiders and investors may be heightened with respect to covered

investment contract offerings due to the unique nature of the representations or promises in these

offerings. 169 The proposed disclosure requirement regarding related person resale or transfer

restrictions is intended to address these concerns by giving investors the information they need to

determine whether there are risks associated with the issuer’s related persons and, if so, whether

the issuer has taken steps to mitigate those risks.

Paragraph (b)(5) – Associated Crypto

Network/Application; Plan of Development

Rule 103(b)(5) would require the issuer to provide a description of the material aspects of

the associated crypto network or associated crypto application and the issuer’s plan of

development with respect to the associated crypto network or associated crypto application,

including the issuer’s progress with respect to its plan of development. As noted in section

II.A.4.a above, information about the associated crypto network or associated crypto application,

including architecture, network protocols and functionality, and security and source code (the

latter two of which are discussed in the next section) is one of the key categories of information

that several commenters stated would be important for a disclosure framework tailored to

covered investment contracts. We agree that a covered investment contract issuer should provide

this information to investors because this information will inform investors’ expectations as to

the intended future state of the project (which, in turn, will help the investor evaluate the

169

For example, covered investment contract issuers often represent or promise to decentralize the associated

crypto network or associated crypto application, at which point the issuer and its insiders may not have control

over, or the ability to profit from, such network or application or the subject crypto asset. This situation could

incentivize insiders to delay such decentralization (to the detriment of investors) to the extent they seek to retain

their leverage to profit from such network, application, or subject crypto asset.

potential future value of the subject crypto asset). In addition, in many cases, the associated

crypto network or associated crypto application will not yet have been developed at the time of

the covered investment contract offering (in which case the funds from the offering may be

funding development of that network or application). In those cases, information regarding the

plan of development may be material for investors as they assess the likelihood of success for the

project, as well as the expected timing and progress in connection with the plan of development,

both at the time of the offering and on an ongoing basis. This proposed rule is intended to elicit

that information in a principles-based manner.

vi.

Paragraph (b)(6) – Security; Source Code

Rule 103(b)(6) would require a description of the material aspects of the security of the

subject crypto asset and the associated crypto network or associated crypto application and, to

the extent the issuer has made it publicly available, the website address at which the code

underlying the associated crypto network or associated crypto application (also referred to as

“source code”) is accessible. 170 As noted in section II.A.4.a above, information about the

associated crypto network or associated crypto application, including architecture, network

protocols and functionality, and security and source code, is one of the key categories of

information that several commenters stated would be important for a disclosure framework

tailored to covered investment contracts.

We agree that a covered investment contract issuer should provide this information to

investors because this information would help investors to independently assess whether the

associated crypto network or associated crypto application may operate consistently with the

170

See proposed 17 CFR 228.103(b)(6).

issuer’s description. In addition, this information would help investors assess potential

cybersecurity risks associated with the associated crypto network or associated crypto

application. This proposed rule is intended to elicit information regarding the security and source

code in a principles-based manner.

vii.

Paragraph (b)(7) – Subject Crypto Asset Economics and

Allocations

Rule 103(b)(7) would require the issuer to provide a description of the material aspects of

the subject crypto asset’s economics and allocations, including: (1) the subject crypto asset’s

supply, pricing, lockups, distribution methods, holdings by related persons, and release

schedules; (2) the associated crypto network or associated crypto application’s mechanisms for

generating and destroying subject crypto assets; and (3) methods to verify the subject crypto

asset’s transaction history. 171 As noted in section II.A.4.a above, information about the subject

crypto asset economics and allocations is one of the key categories of information that several

commenters stated would be important for a disclosure framework tailored to covered investment

contracts. We agree that a covered investment contract issuer should provide this information to

investors because this information would help investors assess the total number of subject crypto

assets that may be outstanding at a given point in time, which bears directly on the value of the

subject crypto asset (and, therefore, the value of the covered investment contract). This proposed

rule is intended to elicit that information in a principles-based manner.

viii.

171

Paragraph (b)(8) – Governance

See proposed 17 CFR 228.103(b)(7).

Rule 103(b)(8) would require the issuer to provide a description of the material aspects of

the subject crypto asset’s and associated crypto network’s or associated crypto application’s

governance mechanisms, smart contract governance mechanisms, and permissions.172 As noted

in section II.A.4.a above, information regarding the governance of the associated crypto network

or associated crypto application is one of the key categories of information that several

commenters stated would be important for a disclosure framework tailored to covered investment

contracts. We agree that a covered investment contract issuer should provide this information to

investors because this information would help investors understand the conditions under which

changes may be made to the subject crypto asset or the associated crypto network or associated

crypto application and who may be empowered to make such changes. Such changes could relate

to the aspects of the subject crypto asset that are relevant to investors’ valuation of the subject

crypto asset and, ultimately, the covered investment contract. This proposed rule is intended to

elicit that information in a principles-based manner.

ix.

Paragraph (b)(9) – Subject Crypto Asset Ecosystem

Rule 103(b)(9) would require the issuer to provide a description of the material aspects of

the subject crypto asset’s current and anticipated ecosystem (i.e., the system or network of

contributors or participants that support and interact with the subject crypto asset and associated

crypto network or associated crypto application), “onchain” and “offchain,” including

information regarding the technology infrastructure, types of participants, and other parties and

systems using the subject crypto asset and the associated crypto network or associated crypto

application. 173 As noted in section II.A.4.a above, information about the subject crypto asset’s

172

See proposed 17 CFR 228.103(b)(8).

173

See proposed 17 CFR 228.103(b)(9).

ecosystem is one of the key categories of information that several commenters stated would be

important for a disclosure framework tailored to covered investment contracts. We agree that a

covered investment contract issuer should provide this information to investors because this

information would help investors understand potential activity with respect to, and uses of, the

subject crypto asset, which may help inform investors’ expectations with respect to potential

demand for the subject crypto asset. Investors’ expectations regarding demand for the subject

crypto asset may be relevant to their valuations of the subject crypto asset and, ultimately, the

covered investment contract. This proposed rule is intended to elicit that information in a

principles-based manner.

Paragraph (b)(10) – Risk Factors

Finally, Rule 103(b)(10) would require the issuer to provide a description, in short,

concise statements, of the material factors that make an investment in the offering speculative or

risky, including risks related to the covered investment contract, the issuer, the subject crypto

asset, and the associated crypto network or associated crypto application. 174 As noted in section

II.A.4.a above, information about the material risks relating to the covered investment contract,

the subject crypto asset, and associated crypto network or application is one of the key categories

of information that several commenters stated would be important for a disclosure framework

tailored to covered investment contracts. We agree that a covered investment contract issuer

should provide this information to investors because this information would help investors assess

the risks associated with investing in the covered investment contracts. This proposed rule is

intended to elicit that information in a principles-based manner.

174

See proposed 17 CFR 228.103(b)(10).

The rule also would provide that this description must avoid generalized statements and

include only factors specific to the covered investment contract, the issuer, the subject crypto

asset, and the associated crypto network or associated crypto application. This is intended to

avoid boilerplate disclosure and help ensure that information disclosed under this rule is

important to an investor’s investment decision.

Request for Comment

26. Should we adopt Rule 103 as proposed?

27. Are there any specific disclosure requirements in Rule 103 that we either should not

adopt or that we should change in the final rules? If so, please identify those provisions

along with any recommended changes to the provisions.

28. Are there any other disclosure requirements that we should specify in Rule 103?

29. In lieu of the principles-based requirements, should we adopt more prescriptive

disclosure requirements? Alternatively, should the final rules supplement the principlesbased requirements with non-exclusive examples of disclosure that may be responsive?

30. Rather than adopting more prescriptive requirements or including examples of disclosure

that may be responsive to the principles-based requirements, should we include more

detailed guidance in the adopting release regarding what types of information may be

responsive to the principles-based requirements?

31. Are there any material terms in the description of the offering we should add, eliminate,

or revise? If so, please identify the term and the reasons for doing so.

32. Should we prescribe the methods by which issuers publicly provide or otherwise deliver

to investors the disclosures in Rule 103? If so, what methods should the rules prescribe?

33. Will the proposed requirements result in disclosures that investors (including retail

investors) will be able to understand and use to make informed investment decisions? If

not, how should we revise the requirements to better ensure investors (including retail

investors) will be able to understand the resulting disclosures and use them to make

informed investment decisions?

34. Do related persons of covered investment contract issuers pose heightened risks with

respect to information asymmetries and misaligned incentives such that the disclosure of

any resale or transfer restrictions is warranted? Are there other risks that such insiders

pose that this disclosure would help address?

35. Instead of only requiring disclosure relating to any related person resale or transfer

restrictions, should we require that issuers establish a specific minimum holding period

for related persons, such as a one-year holding period, as a condition to relying on the

proposed exemptions? Rather than a time-based holding period, should we base any

holding period on the achievement of certain development milestones with respect to the

associated crypto network or associated crypto application? Are there other resale or

transfer restrictions that we should apply with respect to related persons as conditions to

the proposed exemptions in Regulation Crypto Assets?

36. How should we modify proposed Rule 103(b)(10), if at all, to help ensure that the

resulting risk factor disclosure will address only material risks to the issuer and avoid

boilerplate disclosures?

5. Disqualification (Rule 104)

a. Background

Many of the Commission’s existing offering exemptions—including Regulation A,

Regulation D, and Regulation Crowdfunding—contain disqualification provisions. 175 These

provisions generally “disqualify securities offerings from reliance on exemptions if the issuer or

other relevant persons . . . have been convicted of, or are subject to court or administrative

sanctions for, securities fraud or other violations of specified laws.” 176 Disqualification

provisions are intended to protect investors by reducing the risk of fraud in connection with

exempt offerings that include such provisions. 177 As such, we believe it is important to include a

disqualification provision (proposed Rule 104) in Regulation Crypto Assets to help ensure that

investors in covered investment contracts offerings are protected from fraud.

b. Proposed Rule

Rule 104 would provide that the exemptions in Regulation Crypto Assets are not

available if the issuer or any person listed in Rule 262(a) 178 would be subject to disqualification

under Rule 262. Rule 262, in turn, sets forth various disqualifying actions or events, 179 as well as

exceptions from those disqualifying actions or events. 180 Both the disqualifying actions and

175

See, e.g., 17 CFR 227.503 (setting forth the disqualification provision under Regulation Crowdfunding); 17

CFR 230.262 (setting forth the disqualification provision under Regulation A); 17 CFR 230.506(d) (setting

forth the “bad actor” disqualification provision under Regulation D).

176

Disqualification of Felons and Other “Bad Actors” from Rule 506 Offerings, Release No. 33-9414 (July 10,

2013) [78 FR 44730, 44731 (July 24, 2013)].

177

See, e.g., Crowdfunding Adopting Release at 71520-21 (“This will help reduce the potential for fraud in the

market for such offerings, which in turn may reduce the cost of raising capital to issuers that rely on section

4(a)(6), to the extent that disqualification standards lower the risk premium associated with the presence of bad

actors in securities offerings.”).

178

In addition to the issuer, Rule 262(a) lists the following persons: any predecessor of the issuer; any affiliated

issuer; any director, executive officer, other officer participating in the offering, general partner or managing

member of the issuer; any beneficial owner of 20 percent or more of the issuer’s outstanding voting equity

securities, calculated on the basis of voting power; any promoter connected with the issuer in any capacity at the

time of filing, any offer after qualification, or such sale; any person that has been or will be paid (directly or

indirectly) remuneration for solicitation of purchasers in connection with such sale of securities; any general

partner or managing member of any such solicitor; or any director, executive officer or other officer

participating in the offering of any such solicitor or general partner or managing member of such solicitor.

179

See 17 CFR 230.262(a).

180

See 17 CFR 230.262(b).

events, as well as the exceptions from the disqualifying actions or events, would apply under

Rule 104. Additionally, requests for waivers of disqualification, where appropriate, would

remain available to the same extent they are available under Rule 262. 181

We believe it is appropriate to cross-reference the existing standard in Regulation A,

rather than enumerate disqualification requirements specific to the proposed exemptions in

Regulation Crypto Assets, in the interest of regulatory consistency and simplicity. We also

believe that aligning the proposed disqualification standard with the existing standard under

Regulation A (which is aligned with similar provisions in Regulation D and Regulation

Crowdfunding) is appropriate because it is likely to simplify due diligence, particularly for

issuers that may engage in different types of exempt offerings. 182 Our experience with existing

offering exemptions leads us to believe that a bad actor disqualification provision would provide

appropriate investor protections in the context of covered investment contract offerings.

Further, under Rule 104, the disqualification provisions in Rule 262 would not apply with

respect to any conviction, order, judgment, decree, suspension, expulsion, or bar that occurred or

was issued before the date on which Rule 104 becomes effective, if the rule ultimately is

adopted. This approach would prevent prior conduct from triggering disqualification without

prior notice. To address concerns regarding prior disqualifying events, however, Rule 104 would

require the issuer to include in an offering circular or otherwise furnish to each purchaser, a

181

See U.S. Securities and Exchange Commission, Waivers of Disqualification Under Regulation A and

Regulation D (last reviewed or updated Apr. 2, 2025), available at https://www.sec.gov/about/divisionsoffices/division-corporation-finance/waivers-disqualification-under-regulation-regulation-d.

182

We recognize that, in some places, Rule 262 refers to “Regulation A” or other Regulation A rules. Those

references may be somewhat confusing when trying to apply Rule 262 to the Regulation Crypto Assets

exemptions pursuant to proposed Rule 104. For example, Rule 262(a) provides that “[n]o exemption under §§

230.251 through 230.263 (Regulation A) shall be available for the sale of securities if the issuer” or certain

other persons have engaged in certain disqualifying events. 17 CFR 230.262(a). Therefore, we propose

including an instruction to Rule 104(a) stating that references to “Regulation A” or other Regulation A rules in

Rule 262(a) should, for purposes of Rule 104(a), be read as references to Regulation Crypto Assets or its rules.

reasonable time prior to sale, a description in writing of any matters that would have triggered

disqualification under Rule 104 but occurred before the date on which Rule 104 becomes

effective. 183 This disclosure would help put investors on notice of events that would, but for the

timing of such events, have disqualified the issuer from relying on an exemption in Regulation

Crypto Assets. This approach is consistent with the approach the Commission took when

imposing bad actor disqualifications on newly created exemptions in the past. 184 Moreover, the

failure to provide such information would not prevent an issuer from relying on an exemption

under Regulation Crypto Assets if the issuer establishes that it did not know and, in the exercise

of reasonable care, could not have known of the existence of the undisclosed matter or

matters. 185

Request for Comment

37. Should we adopt Rule 104 as proposed?

38. Are there any portions of Rule 104 that we either should not adopt or that we should

change in the final rules? If so, please identify those provisions along with any

recommended changes to the rule.

39. Would it be beneficial to maintain general uniformity between Rule 104 and the

disqualification provisions in Regulation A, as proposed? Are there aspects of this

183

See proposed 17 CFR 228.104(b). This provision is based on a similar disclosure provision in Rule 262. That

provision, however, applies only to disqualifying events that occurred before Rule 262 became effective.

Accordingly, we are including a similar provision in Rule 104 to clarify the date to which such disclosure

provision applies.

184

See, e.g., 17 CFR 230.262(d); 17 CFR 230.506(e).

185

Rule 104 further would provide that an issuer would not be able to establish that it has exercised reasonable care

unless it has made, in light of the circumstances, factual inquiry into whether any disqualifications exist. The

nature and scope of the required factual inquiry will vary based on the facts and circumstances concerning,

among other things, the issuer and the other offering participants. See proposed 17 CFR 228.104, instruction to

paragraph (b).

disqualification provision that are not well suited to Regulation Crypto Assets?

40. Are there types of persons that are subject to disqualification as proposed under Rule 104

that should be excluded? Alternatively, are there types of persons that are not subject to

disqualification under Rule 104 that should be included?

41. Are there types of disqualifying events that would trigger disqualification under Rule 104

that should be excluded? Alternatively, are there types of disqualifying events that would

trigger disqualification under Rule 104 that should be included?

42. Rather than cross-referencing Rule 262, should we instead cross-reference the

disqualification provision in Regulation D or Regulation Crowdfunding? Are there

aspects of these disqualification provisions that are better suited to Regulation Crypto

Assets than the disqualification provision in Rule 262? Alternatively, should we adopt a

standalone disqualification provision rather than cross-referencing a disqualification

provision set forth in an existing exemption?

B. Startup Exemption (Subpart B, Rule 200)

Subpart B of Regulation Crypto Assets would set forth an exemption from the

registration requirements of section 5 of the Securities Act for certain offers, sales, and other

distributions of covered investment contracts during a period of up to four years. This proposed

startup exemption would permit offerings of up to $5 million during the four-year period. The

exemption is intended to provide issuers with temporary relief from Securities Act registration

requirements—during which time they may work towards fulfilling the essential managerial

efforts they represented or promised investors they would engage in under the covered

investment contract—while, at the same time, ensuring that investors remain sufficiently

protected and informed. Issuers that rely on the exemption would remain subject to the antifraud

and antimanipulation provisions of the Federal securities laws, including, but not limited to,

section 17 of the Securities Act and section 10 of the Exchange Act.

1. Background

As noted above, 186 issuers often conduct ICOs when the relevant project (i.e., the crypto

asset and associated crypto network or associated crypto application) is in its early stages or has

not yet begun. In those cases, the issuer typically uses the capital raised in the ICO to fund

development of the project. Because issuers in ICOs typically pair the offer or sale of a crypto

asset (or the promise to deliver a crypto asset at a later date) with representations or promises

regarding their efforts to, for example, develop and market the project, those issuers often are

offering and selling covered investment contracts. 187 If that is the case, then those offers and

sales are subject to the Securities Act and, therefore, must be either registered under section 5 or

made pursuant to an exemption.

As with offers and sales of other types of securities, an issuer of a covered investment

contract must either register its offering or rely on a valid exemption from registration. The

Commission’s existing rules, however, pose two main difficulties when applied to offerings of

covered investment contracts. First, as discussed above, 188 the Commission’s existing disclosure

requirements may not elicit the types of information that are most likely to be material to

investors in covered investment contracts. Thus, these disclosure requirements, when applied to

covered investment contract offerings, can impose undue compliance costs on issuers while

failing to provide investors with information important to their investment decisions. The

186

See supra note 21.

187

See 2026 Interpretation at 13722.

188

See supra section II.A.4.

Commission has confronted similar issues with respect to other asset classes and sought to

address them with bespoke disclosure requirements. 189

Second, subject crypto assets may eventually separate from the issuer’s representations or

promises to engage in essential managerial efforts, and, as a result, the covered investment

contract may cease to exist. This process of the covered investment contract ceasing to exist

generally occurs under the circumstances described in the 2026 Interpretation (e.g., as a result of

the issuer fulfilling, or failing to satisfy, its representations or promises to engage in essential

managerial efforts under the covered investment contract). 190 This process also may be

consistent with issuers’ and investors’ expectations in a covered investment contract offering.

For example, the completion of an issuer’s stated goal at the outset of the offering (i.e., the

fulfillment of its representations or promises to engage in essential managerial efforts under the

covered investment contract) should give rise to the cessation of the covered investment contract.

Similarly, investors’ interest in the offering often is driven by their perception of the likelihood

of the issuer fulfilling its representations or promises and achieving its stated goal. Thus, in these

circumstances, the relevant stakeholders in the offering may share a common interest in

achieving an outcome that will result in the subject crypto assets (that initially were sold subject

to an investment contract) eventually not being subject to the Federal securities laws.

Some have asserted that, as currently applied, the Federal securities laws can inhibit the

realization of this mutually beneficial outcome. 191 In short, for developers to complete crypto

189

See id. (noting that the Commission has adopted Regulation S-K subparts tailored to specific issuers and

transactions, such as Regulation M-A (mergers and acquisitions), Regulation AB (asset-backed securities),

subpart 1200 (oil and gas producing activities), subpart 1300 (mining operations), subpart 1400 (banks and

savings and loans), and subpart 1600 (Special Purpose Acquisition Companies)).

190

See 2026 Interpretation at 13722-23.

191

See, e.g., Commissioner Peirce, Running on Empty; see also letters from Nasdaq; CrowdCheck Law; AIMA;

a16z 1; Crypto Council; Figure Markets.

asset projects as they envision and represent or promise to crypto asset offerees and purchasers,

they often must distribute crypto assets to other persons. This is especially the case when the

project contemplates a functional and decentralized crypto network or application. To the extent

those distributions constitute offerings of covered investment contracts, however, the Securities

Act and the Commission’s rules thereunder can impose prohibitive costs or burdens. 192

The startup exemption, set forth in proposed 17 CFR 228.200 (“Rule 200”), would help

address these concerns, thereby avoiding unduly burdening issuers as they attempt to fulfill their

representations or promises to engage in essential managerial efforts under covered investment

contracts. 193 Specifically, issuers that qualify for the startup exemption would be able to

distribute subject crypto assets to potential associated crypto network or associated crypto

192

Some concerns also have been raised about other aspects of the Federal securities laws that may apply to

transactions involving covered investment contracts. See Commissioner Peirce, Running on Empty

(recommending exemptions from the definitions of “exchange,” “broker,” and “de

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