The U.S. Securities and Exchange Commission (SEC) is taking a significant step toward establishing a regulatory framework for digital asset fundraising, even as Congress continues to debate comprehensive crypto legislation. While the CLARITY Act remains stalled in the Senate, the SEC appears prepared to move forward through formal rulemaking—potentially creating the first crypto-specific fundraising exemption under federal securities law.

The SEC Is Moving Ahead with "Regulation Crypto"

The SEC has placed its long-anticipated crypto asset rulemaking on its formal regulatory agenda, signaling that a Notice of Proposed Rulemaking (NPRM) is expected. Unlike prior guidance, staff statements, or no-action letters, a formal rulemaking under the Administrative Procedure Act would establish a more durable regulatory framework that is significantly harder for future administrations to reverse.

The proposal aims to create a clearer pathway for crypto projects seeking to raise capital while balancing investor protection and market innovation.

Three Proposed Exemptions

According to Chairman Paul Atkins' previously announced framework, the SEC is considering three primary exemptions.

1. Startup Development Exemption

Early-stage blockchain projects would receive a temporary exemption from full Securities Act registration while developing decentralized networks.

Key features include:

• Up to $5 million in fundraising

• Duration of up to four years

• Simplified public disclosures rather than traditional registration

• Required SEC notice filings when entering and exiting the exemption

• Disclosure covering both the token and the associated investment contract

This framework recognizes that many blockchain networks require time to become sufficiently decentralized before traditional securities analysis changes.

2. Crypto Fundraising Exemption

More mature projects could qualify for a dedicated fundraising exemption allowing:

• Capital raises of up to $75 million during any 12-month period

• Audited financial statements

• Ongoing semiannual reporting

• Compliance obligations that are lighter than a full public offering but more robust than startup disclosures

The proposed structure resembles Regulation A+, adapting an existing securities exemption for digital asset offerings rather than creating an entirely new regulatory model.

3. Investment Contract Safe Harbor

Perhaps the most consequential proposal addresses one of the industry's longest-running legal questions:

When does a crypto asset stop being a security?

The proposed safe harbor would establish a rule-based framework under which tokens could cease being treated as investment contracts once:

• Essential managerial efforts have ended,

• Founders no longer control the network, and

• The blockchain operates independently.

If adopted, this would provide greater certainty regarding when SEC jurisdiction ends and could significantly reduce ongoing regulatory uncertainty for decentralized projects. The proposal builds upon the SEC and CFTC's March 2026 joint interpretive guidance regarding crypto assets.

This Is Not a Free Pass

Importantly, these exemptions would not eliminate securities law obligations.

Issuers would still need to satisfy numerous conditions, including:

• Accurate disclosures

• Compliance with fundraising limits

• Required filings

• Ongoing reporting where applicable

Projects that fail to comply could lose the exemption and become subject to traditional securities registration requirements and SEC enforcement actions.

Meanwhile, the CLARITY Act Waits

While the SEC advances administrative rulemaking, Congress has yet to enact comprehensive digital asset market structure legislation.

The CLARITY Act, which would establish statutory rules allocating regulatory authority between the SEC and the Commodity Futures Trading Commission (CFTC), remains stalled in the Senate amid legislative negotiations and an increasingly limited congressional calendar. Industry participants continue to monitor whether Congress can advance the legislation before the upcoming recess.

The legislative version differs from the SEC's proposal in several respects, including fundraising thresholds and overall offering limits, meaning the final regulatory landscape could change depending on whether Congress ultimately acts.

What This Means for Crypto Companies

Although the SEC's proposal is not yet final, it represents a meaningful shift from regulation through enforcement toward rulemaking.

Companies planning token issuances should begin evaluating:

• Whether future fundraising may qualify under the proposed exemptions;

• What disclosure and reporting systems will be necessary if the rules are adopted;

• How token economics and governance structures may affect eligibility for a future investment contract safe harbor; and

• Whether fundraising timelines should account for potential changes resulting from either SEC rulemaking or congressional action.

Because the proposal remains subject to notice-and-comment rulemaking, the final requirements could differ substantially from the current framework.

Looking Ahead

For years, crypto founders have operated amid significant uncertainty over how federal securities laws apply to digital asset offerings. The SEC's proposed crypto fundraising exemptions represent the agency's clearest effort to provide a structured regulatory pathway without requiring every project to undergo full securities registration.

At the same time, the fate of the CLARITY Act will continue to shape the broader market structure governing digital assets. Whether the ultimate framework comes through agency rulemaking, congressional legislation, or a combination of both, businesses developing blockchain products should closely monitor these developments and prepare for a more defined—but still evolving—compliance landscape.

Learn More

This blog post is for informational purposes only and is not legal advice. Please consult with a Launch Legal attorney regarding your specific situation.