SEC Unveils "Regulation Crypto Assets" Proposal to Formalize Token Fundraising

The U.S. Securities and Exchange Commission has proposed a new framework that would give crypto projects a defined route to sell tokens to the public without running the full securities-registration process. The proposal, dubbed Regulation Crypto Assets (Reg CA), was released on Aug. 18 and marks the agency's biggest shift on token fundraising since it spent years dismantling the ICO playbook that powered the 2017 crypto boom. Reg CA would introduce two exemptions for capital raising via token sales. A one-time "startup exemption" would allow projects to raise up to $5 million over as long as four years. A second, repeatable "fundraising exemption" would permit up to $75 million in any 12-month period, with escalating disclosure obligations and audited financial statements for larger offerings. A central element is a conditional safe harbor that could allow certain crypto assets to be treated as non-securities once an issuer's managerial efforts are completed or discontinued. The proposal reflects a pivot from the SEC's post-2017 enforcement-heavy approach, when dozens of projects faced lawsuits, cease-and-desist orders, and penalties. It also builds on interpretive guidance issued in March 2026 that began drawing more precise classifications for crypto assets, pairing those classifications with specific fundraising pathways. Reg CA arrives as Congress remains stalled on crypto legislation. The CLARITY Act, which would have created similar securities-versus-non-securities distinctions for digital assets, did not advance. Some industry observers have dubbed the prospective regime "ICO 2.0," though the comparison is limited. The SEC's approach includes principles-based reporting and anti-fraud protections aimed at avoiding a repeat of 2017's free-for-all. Requirements vary by tier: a $2 million raise under the startup exemption would face lighter obligations than a $75 million raise under the fundraising exemption, where audited financials and deeper operational disclosures would be required. The public comment period is open through Oct. 20, 2026.