The public comment period for the U.S. Securities and Exchange Commission’s (SEC) crypto asset proposal closes today. The draft, titled “Regulation Crypto Assets,” aims to change how token projects raise capital. It proposes a registration exemption for eligible issuers raising up to $75 million annually.
The SEC’s official schedule lists October 20, 2026, as the deadline for public comments. However, this date does not mark the rules’ entry into force. The agency still lists the regulation as a proposal.
The process matters for startups seeking funding through token sales in the United States. The draft centers on a tailored offering framework for certain investment contracts involving crypto assets. Its scope therefore falls short of granting blanket permission for all crypto transactions.
Two Separate Funding Routes for Crypto Projects
The SEC proposes two exemptions as alternatives to existing registration requirements. The first would allow eligible startups to offer up to $5 million over four years. The second would cover fundraising of up to $75 million in each 12-month period.
These thresholds create separate funding routes for projects of different sizes. Companies would still need to meet the relevant conditions and provide investors with required disclosures. The proposal preserves prohibitions against fraud and market manipulation for issuers using either exemption.
The higher fundraising limit also comes with financial statement and ongoing reporting requirements. The SEC thus seeks to improve access to capital while requiring information that helps investors assess projects.
In its rationale, the agency argues that existing rules do not adequately address crypto projects’ characteristics. Network development and growing token adoption, in particular, create needs that differ from traditional financing models. According to the SEC, this mismatch can complicate transaction planning and constrain innovation.
Tokens’ Legal Status Also Takes Center Stage
Alongside the fundraising exemptions, the draft includes a conditional “safe harbor” mechanism. This addresses circumstances in which a crypto asset would cease to be subject to an investment contract.
The SEC’s approach distinguishes a project’s initial sale from its later development stages. The agency notes that an asset initially subject to an investment contract may eventually leave that scope. However, the draft makes this transition subject to specific conditions.
This distinction matters for token issuers seeking to understand their subsequent obligations. It also aims to help investors assess the legal status of the assets they purchase. The proposal does not automatically grant every token an exemption.
Academics Raise Investor Protection Concerns
Some legal academics, meanwhile, oppose the SEC’s proposed framework. A submission from John Coates, John Coffee and other signatories questions the need for separate crypto regulation.
The academics argue that existing fundraising exemptions already offer several options. They also warn that giving companies greater flexibility over disclosures could weaken investor protection.
Their objections also focus on investors’ ability to compare projects. According to the signatories, allowing issuers broad discretion to determine which information matters creates risks. They therefore urge the SEC to address fundamental shortcomings and submit a revised proposal.
The SEC’s comment file shows that a range of market participants has joined the process. It includes submissions from representatives of Bitwise, Hyperliquid Policy Center, Chainalysis and AIMA. Their participation shows that the debate extends beyond token development teams.
Today’s deadline marks an important point in the proposal’s public comment process. However, the SEC’s final regulation will determine the precise exemptions available to companies. The current official page does not announce final approval or an effective date.
