Regulation Crypto Assets

Federal RegisterAug 21, 2026

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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://sec.gov/comments/s7-2026-27/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://sec.gov/rules-regulations/public-comments/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://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:

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

EP21AU26.039

Table of Contents

I. Introduction

A. The Commission's Regulatory Approach to Crypto Assets

1. Approach Before 2025

15 U.S.C. 77a

et seq.

2. Developments Beginning in 2025

B. Written Input Provided to the Crypto Task Force

1. Security Status

2. Scoping Out

3. Public Offerings

4. Safe Harbor From Registration

C. Summary of the Proposed Rules

II. Discussion of Proposed Rules

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

1. Definitions (Rule 100)

2. General Provisions (Rule 101)

3. Inflation Adjustment for Offering Limits (Rule 102)

4. Disclosure Requirements (Rule 103)

5. Disqualification (Rule 104)

B. Startup Exemption (Subpart B, Rule 200)

1. Background

2. Proposed Rule

C. Fundraising Exemption (Subpart C, Rules 300 Through 307)

1. Background

2. Proposed Rules

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

1. Background

2. Proposed Rules

E. Preemption of State Registration and Qualification Requirements (Definition of “Qualified Purchaser” in Subpart E, Rule 500)

1. Background

2. Proposed Rule

III. Other Matters

IV. Economic Analysis

A. Economic Baseline

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

2. Affected Issuers

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

4. Affected Financial Intermediaries

B. Economic Effects of Individual Provisions

1. Benefits and Costs of Proposed Regulation Crypto Assets

2. Benefits and Costs of the Proposed Startup Exemption

3. Benefits and Costs of the Proposed Fundraising Exemption

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

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

C. Effects on Efficiency, Competition, and Capital Formation

1. Effects on Efficiency

2. Effects on Competition

3. Effects on Capital Formation

D. Reasonable Alternatives

E. Request for Comment

V. Paperwork Reduction Act

A. Background

B. Estimate of Issuers

1. Startup Exemption

2. Fundraising Exemption

3. Investment Contract Safe Harbor

C. Estimate of Issuer Burdens

1. Startup Exemption

2. Fundraising Exemption

3. Form TR

4. Form ID

D. Collections of Information Are Mandatory

E. Confidentiality

F. Retention Period of Recordkeeping Requirements

G. Request for Comment

VI. Present Values and Annualized Values of Monetized Benefits and Costs

VII. Congressional Review Act

VIII. Initial Regulatory Flexibility Act Analysis

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

B. Legal Basis

C. Small Entities Subject to the Proposed Rules

D. Projected Reporting, Recordkeeping, and Other Compliance Requirements

E. Duplicative, Overlapping, or Conflicting Federal Rules

F. Significant Alternatives

G. Request for Comment

Statutory Authority

I. Introduction

We are proposing new rules to create a tailored offering regime for certain investment contracts involving crypto assets.

We refer to those investment contracts throughout this release as “covered investment contracts.”

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.

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.

Since the advent of Bitcoin in 2008,

the crypto asset markets have grown significantly.

Although still only a fraction of the size of the global debt and equity markets,

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.

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://whitehouse.gov/wp-content/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://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).

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 test developed by the Supreme Court of the United States in

SEC

W.J. Howey Co.

(known as the “

Howey

test”

) 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.

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. 33-11412 (Mar. 17, 2026) [91 FR 13714 (Mar. 23, 2026)] (“2026 Interpretation”).

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).

The Commission's existing rules generally do not contemplate or facilitate this type of evolution.

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 widely held and used—that is, the crypto asset's “network effects.”

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

or otherwise subject to resale restrictions.

Those exemptions also may limit the extent to which an issuer may sell securities to retail investors,

which could result in concentrated (rather than widespread) holdings.

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.

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)).

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.

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-backed securities

and real estate investment trusts

), 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.

See

2026 Interpretation.

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.

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,

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.”

One such ICO

involved the issuance of crypto assets called “DAO Tokens” by an unincorporated organization named “The DAO.”

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”)

with respect to the ICO of DAO Tokens.

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.”

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://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.

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.

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.

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.

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.

See, e.g., Gladius Network LLC,

Release No. 33-10608 (Feb. 20, 2019);

Paragon Coin, Inc.,

Release No. 33-10574 (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).

Some Commissioners and other commentators expressed concerns about the Commission's approach to crypto assets during this period.

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.

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.

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://sec.gov/newsroom/speeches-statements/peirce-remarks-duke-conference-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://sec.gov/newsroom/speeches-statements/uyeda-speech-sec-speaks-090922;

Commissioner Mark T. Uyeda,

Remarks at the “SEC Speaks” Conference 2025

(May 19, 2025),

available at https://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://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.

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.

To this end, the Crypto Task Force has hosted a series of roundtables,

held meetings with members of the public,

and solicited and received written input from members of the public.

That written input is described in more detail in section I.B below.

See

U.S. Securities and Exchange Commission, Crypto Task Force,

available at https://sec.gov/about/crypto-task-force.

See id.

See

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

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

See

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

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

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 matters, including meme coins,

proof-

of-work mining activities,

stablecoins,

offerings and registrations of securities in the crypto asset markets,

protocol staking activities,

crypto asset exchange-traded products,

liquid staking activities,

and tokenized securities.

See

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

Staff Statement on Meme Coins

(Feb. 27, 2025),

available at https://sec.gov/newsroom/speeches-statements/staff-statement-meme-coins.

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 Proof-of-Work Mining Activities

(Mar. 20, 2025),

available at https://sec.gov/newsroom/speeches-statements/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://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://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://sec.gov/newsroom/speeches-statements/statement-certain-protocol-staking-activities-052925.

See

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

Crypto Asset Exchange-Traded Products

(July 1, 2025),

available at https://sec.gov/newsroom/speeches-statements/cf-crypto-asset-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://sec.gov/newsroom/speeches-statements/corpfin-certain-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://sec.gov/newsroom/speeches-statements/corp-fin-statement-tokenized-securities-012826?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://sec.gov/rules-regulations/staff-guidance/trading-markets-frequently-asked-questions/frequently-asked-questions-relating-crypto-asset-activities-distributed-ledger-technology?utm_medium=email&utm_source=govdelivery.

Further, President Donald J. Trump issued an executive order titled “Strengthening American Leadership in Digital Financial Technology” on January 23, 2025.

This executive order, among other things, established the President's Working Group on Digital Asset Markets (“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.”

Exec. Order No. 14178,

Strengthening American Leadership in Digital Financial Technology

(Jan. 23, 2025) [90 FR 8647 (Jan. 31, 2025)] (“Exec. Order No. 14178”).

Id.

at section 4(c)(i).

On July 30, 2025, the President's Working Group issued a report consisting of several regulatory recommendations.

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:

See

President's Working Group Report at 141-59.

• Establish a fit-for-purpose exemption from registration under section 5 of the Securities Act for securities distributions involving digital assets;

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).

• 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

network to allow for progressive functionality or decentralization; and

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.”).

• Establish a safe harbor for certain airdrops from characterization as “sales” under section 2(a)(3) of the Securities Act

or an exemption from the corresponding registration requirements under section 5 of the Securities Act.

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

On July 31, 2025, following publication of the President's Working Group Report, 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.”

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.”

Chairman Paul S. Atkins,

American Leadership in the Digital Finance Revolution

(July 31, 2025),

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

Id.

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”).

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 collectibles, and digital tools are not themselves securities.

See

2026 Interpretation.

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.

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.

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.

Id.

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.

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.

Id.

at 13721.

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 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.

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 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.

See id.

at 13722.

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.

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.”

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.

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

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.”).

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.

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.”

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.

2. Scoping Out

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.”

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.”

Cmr. Peirce Request for Input.

Id.

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.

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.

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.”

Another commenter suggested not “fixat[ing] on classification” but “regulating residual risk across three axes: agency risk, derivative risk, and market-integrity risk.”

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.”

Commissioner Peirce

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

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.

Cmr. Peirce Request for Input.

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.

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.

For example, some commenters expressed the view that the 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.

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.

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.

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). 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 2.

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.

In addition, several commenters generally supported Regulation A as a potential starting point or model for a covered investment contract offering framework.

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.

Commenters also pointed to the difficulty of complying with State securities laws with respect to securities purchased in Regulation A offerings, including because the Federal securities laws do not preempt State law with respect to secondary market transactions in such securities.

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).

See, e.g.,

letters from CrowdCheck Law; DealMaker.

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.

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.”

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.”

Commissioner Peirce's statement solicited input on several aspects of her suggested exemption.

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://sec.gov/newsroom/speeches-statements/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://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.

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

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.

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 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

See

supra

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

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

105

that would comprise the following subparts:

105

See

proposed 17 CFR part 228.

• 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.

106

See

proposed 17 CFR 228.100 through 104.

• 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.

107

15 U.S.C. 77e.

108

See

proposed 17 CFR 228.200.

• 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.

109

See

proposed 17 CFR 228.300 through 307.

110

See

17 CFR 230.251 through 263.

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

111

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

112

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

113

See

proposed 17 CFR 228.400.

• 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 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 1-CRYPTO, 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 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.

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.

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 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.

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.

118

See supra

note 52 and accompanying text.

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.

119

See

infra

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

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.

120

See

infra

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

As noted in section I above,

121

the term “crypto asset” would be defined as any digital 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

121

See supra

note 3.

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, Public Law 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.

SEC,

387 F.2d 466 (10th Cir. 1967),

cert. denied,

391 U.S. 905 (1968) (beavers);

Miller

Cent. Chinchilla Grp., Inc.,

494 F.2d 414 (8th Cir. 1974) (chinchillas);

Glen-Arden Commodities

Costantino,

493 F.2d 1027 (2nd Cir. 1974) (Scotch whisky warehouse receipts).

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 term is consistent with its definition in 17 CFR 230.261(e) of Regulation A and is used throughout the fundraising exemption.

126

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).

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.

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”).

127

See

2026 Interpretation at 13717.

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 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 non-security crypto asset. Should we instead adopt a definition of “covered investment contract” that would permit investment contracts involving assets other than a non-security 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?

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.

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 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 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

129

Proposed 17 CFR 228.101(a).

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).

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 existing exemptions (including offerings under Regulation Crowdfunding, Regulation A, and Regulation D).

131

See

proposed 17 CFR 228.101(b).

132

See

Facilitating Capital Formation Release at 3517.

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

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).

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 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

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.

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 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 notice-and-comment rulemaking.

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://bls.gov/cpi.

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.

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 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.

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-An-Exempt-Offering-Framework-for-Token-Issuances/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://paradigm.xyz/2023/04/secs-path-to-registration-part-iii.

142

Regulation S-K was created as part of the integrated disclosure initiative to be the repository for the non-financial 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://sec.gov/news/studies/2013/reg-sk-disclosure-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://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.

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 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.

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”).

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.

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 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

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.

154

See, e.g.,

letters from a16z 3; AIMA; CfPA; Coinbase; GDCA; SIFMA 2; TDC 2.

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' 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 information is unknown or not reasonably available.

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.”).

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.

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.

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 future developments in the crypto asset markets and thereby avoid the need for the Commission to continually revisit and update the disclosure requirements.

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.

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.

i. 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.

160

See

2026 Interpretation at 13721-22.

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 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

161

See id.

at 13721-22.

162

See id.

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 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;

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).

• 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

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.

165

See

proposed 17 CFR 228.103(b)(3).

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 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.

166

See

proposed 17 CFR 228.103(b)(4).

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.

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.

v. 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 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.

170

See

proposed 17 CFR 228.103(b)(6).

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 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.

171

See

proposed 17 CFR 228.103(b)(7).

viii. Paragraph (b)(8)—Governance

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.

172

See

proposed 17 CFR 228.103(b)(8).

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 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.

173

See

proposed 17 CFR 228.103(b)(9).

x. 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 principles-based 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.

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.”).

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 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

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).

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://sec.gov/about/divisions-offices/division-corporation-finance/waivers-disqualification-under-regulation-regulation-d.

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.

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.

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 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

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).

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 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.

186

See supra

note 21.

187

See

2026 Interpretation at 13722.

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 Commission has confronted similar issues with respect to other asset classes and sought to address them with bespoke disclosure requirements.

189

188

See supra

section II.A.4.

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)).

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.

190

See

2026 Interpretation at 13722-23.

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 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

191

See, e.g.,

Commissioner Peirce, Running on Empty;

see also

letters from Nasdaq; CrowdCheck Law; AIMA; a16z 1; Crypto Council; Figure Markets.

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 “dealer” under the Exchange Act). This proposal does not address those recommendations. We will continue to consider whether further action with respect to covered investment contracts beyond the proposed rules in this release is warranted. To the extent concerns have been raised about whether an issuer may need to register a class of covered investment contracts under section 12(g) of the Exchange Act, we do not view covered investment contracts as equity securities, and, therefore, we believe they are not subject to section 12(g). Specifically, a covered investment contract is not an “equity security” under section 3(a)(11) of the Exchange Act, 17 CFR 240.3a11-1, or 17 CFR 230.405. The term “investment contract” is not included in the aforementioned statutory section or rules, and a covered investment contract does not constitute any of the financial instruments enumerated in the definition of “equity security” in such section or rules.