Article by Meng Yan
On August 18, 2026, the SEC proposed the "Regulation Crypto Assets," aiming to end years of primarily relying on enforcement actions to regulate token offerings and establish a dedicated public financing framework for crypto assets. The public comment period ended on October 20.
The four most important changes in the new regulations are:
First, provide registration exemptions for early-stage projects, allowing up to $5 million in fundraising over four years without requiring audits or the use of licensed intermediaries.
Second, provide a two-tiered financing exemption for more mature projects, with annual financing limits of $20 million and $75 million, respectively, accompanied by varying levels of disclosure, financial reporting, and audit requirements.
Third, establish a securities-like exit safe harbor. After completing or permanently terminating the promised development work, project teams can submit Form TR to ensure that the associated tokens are no longer considered securities under the original investment contract.
Fourth, federal rules exempt certain offerings from state securities registration requirements, reducing compliance barriers for cross-state issuance and trading.
What do the public think?
Norwegian BI School researcher Mert Erinc has created a publicly accessible tracking website that uses three independent AI reviewers to categorize opinions point by point.
As of October 20, the SEC has received 171 comments, of which 165 have been coded.
Classified by overall position:
- Explicit support: 8, accounting for 5%
- Conditional support: 115, accounting for 70%
- Explicit opposition: 14 votes, accounting for 8%
- Mixed positions: 3, accounting for 2%
- Procedural or off-topic comments: 25, accounting for 15%
It is important to note that 70% conditional support does not mean 70% approve the original text. They generally accept the direction of the reform but request modifications to specific provisions.
Nasdaq explicitly supported it, calling the safe harbor a "carefully designed mechanism" and stating that the disclosure requirements are appropriately tiered. A letter from SkyBridge Capital described the proposal as "thoughtful, measured, and long overdue." The Hyperliquid Policy Center urged prompt adoption but requested clarification that filing Form TR does not constitute an admission that prior assets were securities. Ava Labs called it an "important first step," while also arguing that the definition of "crypto assets" is too broad.
Five securities law scholars—Coates, Coffee, Cox, Fox, and Seligman—jointly argued that the proposal contains fundamental flaws. They contend that the startup exemption deviates from nearly a century of securities law tradition and that adjustments to Regulation A would suffice for fundraising exemptions. John Reed Stark and Lee Reiners of Duke University called for a full withdrawal. Public Citizen criticized the safe harbor as a “regulatory loophole,” arguing that preempting state law effectively shields bad actors. The Independent Community Bankers of America (ICBA) asserted that unless each convenience measure is proven to be risk-based, it should not be finalized, and demanded the inclusion of a sunset clause. Meanwhile, Davis Polk LLP took a middle ground, stating that “better alternatives exist without needing to start from scratch.”
If you look further at the revision direction:
- Request for relaxed regulation: 44, accounting for 27%
- Call for stricter regulation: 49, accounting for 30%
- Simultaneously require loosening and tightening: 23, accounting for 14%
- The remaining primary requirements clarify, maintain the original proposal, or are not applicable to this category.
Supporters argue that existing securities regulations are not suitable for all token offerings. The new rules would reduce fundraising costs for startups, provide legitimate avenues for retail investors to participate, and clarify when tokens can be exempt from securities regulation.
Opponents hold two sharply contrasting views: some believe the new rules remain overly regulatory by bringing decentralized projects under traditional securities frameworks, while others worry that the exemptions are too lenient, undermining investor protection and potentially creating opportunities for fraud and insider selling.
The debate over loosening and tightening centers on four issues.
First, funding limits. The loosening camp seeks to raise the startup funding cap from $5 million and exclude non-funding token distributions such as airdrops and staking rewards; the tightening camp expresses concern that the exemption is too broad.
Second, disclosure requirements. The deregulatory camp emphasizes cost reduction, while the regulatory camp calls for standardized disclosure through the SEC’s EDGAR system, enhanced financial audits, and ongoing reporting. This is the area with the strongest calls for tightening: 83 letters requested stricter rules, compared to only 8 advocating relaxation. The primary demands include requiring initial disclosures to be filed via EDGAR and mandating audits for Tier 1 financial reports. Of the 19 letters advocating relaxation, state law preemption was the focus; of the 15 letters supporting easing rules, the emphasis was on whether DAOs without a legal entity can qualify.
Third, insider sales. The new regulations do not mandate lock-up periods, but auditing institutions such as the Center for Audit Quality have proposed additional requirements. The rules regarding insider resales have been tightened, with calls for holding periods or lock-up periods.
Fourth, and most controversial, is the safe harbor. Of the 97 comments, 36 called for loosening and 28 for tightening the securities status exit mechanism. Those advocating for relaxation seek to expand the conditions for exit and more fully recognize network functionality and decentralization; those advocating for tightening demand independent verification to prevent project teams from permanently exiting securities regulation based solely on their own assertions. Bitwise advocates evaluating exit based on externally observable facts, while Public Citizen and others argue that the exit threshold is too low.
My assessment is that the likelihood of the new regulations being finalized is high, but they will likely require revisions. I estimate it will be only a few months until they are fully implemented.
The reason is that a clear regulatory policy foundation for the reform direction has been established, with the vast majority of substantive feedback focused on how to modify the framework rather than reject it entirely. However, the SEC must still address investor protection, legal authorization, and potential legal challenges, leaving the final timeline uncertain.
If implemented, the U.S. crypto industry will gain three major changes: a dedicated legal pathway for token public fundraising through the revival of compliant ICOs; a clear process for projects to exit securities regulation; and a more unified regulatory boundary between federal and state levels.
The most profound significance of this reform is an attempt to establish a complete regulatory pathway for crypto projects, from fundraising and development to a mature network. For many in the industry, a more easily understood concept is "restarting compliant ICOs."
Regulatory certainty, of course, does not equate to investment safety. The true measure of the quality of the new regulations will lie in three pillars: disclosure requirements, insider constraints, and conditions for exiting securities status. The landscape will likely remain mixed, with both highs and lows ahead. But regardless, once this new regulation takes effect, the crypto industry will enter a new era—and my long-anticipated fusion of AI and tokenomics should finally find its rightful place.