Regulation Crypto Assets is the most significant step the U.S. Securities and Exchange Commission (SEC) has taken toward establishing a clear regulatory framework for digital assets.

On August 18, 2026, the SEC proposed new rules specifically designed for crypto assets. Importantly, this is a proposal, not a final rule. The public will have 60 days to submit comments following publication in the Federal Register.

However, for VASPs, crypto exchanges, token issuers, and other digital asset businesses, this proposal is significant. It signals a fundamental shift in how the SEC intends to approach the regulation of the crypto industry going forward.

What Is the SEC's "Regulation Crypto Assets"?

The SEC's approach to crypto regulation was largely enforcement-driven. It applied traditional securities rules to digital assets without adapting them to the unique characteristics of the crypto industry, while taking action against businesses that struggled to comply with a framework that was never specifically designed for them.

As SEC Chairman Paul Atkins confirmed, that approach is now changing. The proposed rules include two exemptions from the registration requirements of the Securities Act of 1933, specifically tailored to certain investment contracts involving crypto assets.

Morrison Foerster explained this as a significant shift from an approach that relied primarily on informal guidance and enforcement. If adopted, the proposal would establish the SEC's first bespoke crypto offering regime.

Importantly, the proposal does not change the fundamental legal test for determining whether an asset is a security. Reed Smith noted that it does not change the threshold Howey analysis or create automatic classifications for specific crypto assets or transactions. Instead, it provides clearer and workable pathways for businesses whose activities involve investment contracts tied to crypto assets.

4 Key Provisions of The Regulation Crypto Assets

1. Proposed Fundraising Exemptions

The proposal provides two exemptions that would give eligible crypto businesses a simpler way to raise money without going through full Securities Act registration.

The first is a startup exemption, which would allow a project to raise up to $5 million over a four-year period. The second would allow eligible projects to raise up to $75 million in any 12-month period.

These exemptions do not mean businesses can raise money without giving investors information. Both would require issuers to provide disclosures about the project, the investment contract, and the crypto asset involved. The larger fundraising exemption would also come with additional requirements, including financial statements and ongoing reporting for the applicable tier.

The startup exemption is particularly useful for early-stage crypto projects. It would give them a defined period to raise money and develop their projects under a framework designed specifically for crypto assets, rather than requiring them to follow the full registration process.

2. Investment Contract Safe Harbor

The proposed investment contract safe harbor is one of the most significant parts of the framework. It could allow a crypto asset to stop being subject to an investment contract once the issuer has completed or permanently stopped the essential managerial work it promised or represented it would carry out.

Put simply, a crypto asset does not necessarily have to remain tied to an investment contract forever. If the project has completed the key work investors were relying on the issuer to perform, or the issuer has permanently stopped doing that work, the investment contract could come to an end.

This could be especially important for projects that start with a central development team but are designed to become more independent or decentralized over time. The safe harbor would give these projects a clearer path as the issuer's role changes.

3. Disclosure and Reporting Requirements

The exemptions do not remove investor protection requirements. Both would require issuers to give investors important information, although the amount of information would depend on the exemption being used.

The startup exemption would mainly require clear, narrative information about the project, the investment contract, and the crypto asset. The larger fundraising exemption would require more detailed information, including financial statements and ongoing reports for the applicable tier.

4. Secondary Trading

The proposal also covers what happens when investors want to trade these crypto assets after they are issued. It would provide federal preemption from certain state securities registration and qualification requirements for qualifying secondary market transactions involving assets issued under the proposed framework.

In practical terms, this could make it easier for exchanges and trading platforms to support secondary trading of qualifying crypto assets because they would not have to deal with certain state-level registration requirements.

However, this does not mean that all crypto assets would be free from securities regulation when traded on secondary markets. The proposed relief would apply only when the specific requirements of Regulation Crypto Assets are met.

What Regulation Crypto Assets Means for VASPs and Crypto Businesses

Regulation Crypto Assets changes the operating environment for crypto businesses in the United States in three concrete ways depending on who you are:

1. 1.For token issuers, it provides a lawful, structured path to raise capital in the United States without offshore structuring, something the old framework made extremely difficult. Projects that previously moved operations abroad to avoid SEC enforcement now have a reason to stay onshore.
2. 2.For exchanges and trading platforms, the secondary market provisions reduce legal uncertainty around listing and trading assets that were offered under the new exemptions. This matters for any platform handling post-issuance crypto assets.
3. 3.For compliance teams, it signals that the SEC is moving toward rulemaking, which means written, enforceable standards that businesses can actually plan around, rather than enforcement actions they cannot predict.

That being said, it is equally important to understand what this proposal does not do:

1. 1.It does not create a new licensing regime for VASPs. Its scope is specifically focused on investment contracts involving crypto assets — not the entire digital asset ecosystem.
2. 2.It does not automatically reclassify all digital assets. Each asset still needs to be assessed individually under the existing legal framework.

As the Federal Register confirms, the proposed offering regime is intended to facilitate capital formation and accommodate innovation within the crypto asset market.

What VASPs and Crypto Businesses Should Consider Now

This is a proposal with a 60-day public comment window, with comments due by October 20, 2026. Businesses involved in crypto-asset offerings have an opportunity to provide input before the rules are finalized. Practical steps to consider now include:

1. 1.Review how your current or planned token offerings are structured: Assess whether your offerings could involve a covered investment contract under the proposed framework and whether any of the proposed exemptions or safe harbor could apply.
2. 2.Assess your disclosure practices: Even though the proposal is not yet final, reviewing your existing disclosures against the proposed framework can help identify potential gaps and prepare for possible future requirements.
3. 3.Evaluate how secondary sales could be affected: If your business facilitates or participates in secondary sales of crypto assets covered by the proposal, review the proposed limitations and conditions that could apply.
4. 4.Consider submitting a public comment: The SEC is accepting comments on the proposal until October 20, 2026. Businesses with practical experience in crypto-asset offerings and compliance can submit their views through the SEC's official comment process.
5. 5.Monitor the rulemaking: Regulation Crypto Assets is still a proposal, so businesses should monitor the SEC and Federal Register for developments, revisions, and the eventual final rule.

Conclusion

For VASPs and crypto businesses, Regulation Crypto Assets could provide a more defined path for operating within the U.S. securities framework. If adopted, the rules could give qualifying projects a clearer route to raising capital and help businesses better understand what is expected of them. But that clarity will also come with greater responsibility. The businesses best positioned to benefit will be those that understand the framework and build their offerings and compliance processes around it from the beginning.

Navigating Regulation Crypto Assets With A&D Forensics

Regulation Crypto Assets introduces new disclosure obligations, fundraising thresholds, and safe harbor conditions and understanding how they apply to your specific business requires more than reading the proposal. At A&D Forensics, we help VASPs, crypto exchanges, fintechs, and digital asset businesses navigate exactly this kind of regulatory shift.

For businesses that need ongoing support as the rules develop, our Compliance-as-a-Service model provides outsourced compliance oversight, transaction monitoring supervision, sanctions screening guidance, and staff training, so your programme stays current as Regulation Crypto Assets moves from proposal to final rule. If you are unsure how this proposal affects your compliance obligations, speak to our team today.