On 18 August 2026 the U.S. Securities and Exchange Commission proposed a rule package called Regulation Crypto Assets. It was issued under releases 33-11434 and 34-106150, file number S7-2026-27, and comments will be accepted for 60 days after publication in the Federal Register.
My reason for writing this is professional and personal in equal measure. Over the past few years I have run a great many Howey analyses and written a great many token reports. The tiring part of that work was never the difficulty of the law; it was that the answer could not be known in advance. The same token can support three different readings, and which one is correct is often something you learn only when an authority turns up. A predictable regime in this area would make me genuinely glad. The proposal is not final, but it is aimed squarely at that problem.
Why I care about this so much
The Howey test looks at the specific facts of a case: is there an investment, is there a common enterprise, does the expectation of profit derive from the efforts of others? The questions look simple; the answers are not. The test operates retrospectively. It is applied after the token has been distributed, after the team has published a roadmap, after the community has formed expectations.
In practice this produces several competing standards for the same asset. Every exchange works differently. One asks for a legal opinion; another applies its own internal committee checklist. One wants a lock-up schedule and treasury wallet addresses in the tokenomics; another looks only at the team allocation. One wants a current security audit; another treats the existence of an audit as sufficient. The format of the report, its length and the questions it must answer vary from venue to venue. A listing review is as much a question of institutional culture as of law.
Add the launchpad layer and it becomes markedly more complex. A launchpad has its own participation rules, its own lock-up and vesting schedule, its own list of restricted jurisdictions and, more often than not, its own legal opinion template. The same project, in the same week, is described three different ways: as an offering structure to a launchpad, as a listing file to an exchange, and as a risk note to an investor. All three have to be accurate; none of them can be identical, because the three audiences are not asking the same questions. I have compared how the different initial offering structures diverge in a separate article, and those distinctions still hold.
The cost of this fragmentation is not only legal fees. Because teams cannot tell which standard will be applied, they either adopt the most conservative reading and constrain the product, or adopt the loosest one and defer the risk. Neither is healthy.
What the proposal contains
The proposal creates two exemptions from Securities Act registration for investment contracts involving crypto assets. The structure is tiered by the size and the repeatability of the raise.
| Feature | Startup exemption | Fundraising exemption |
|---|---|---|
| Ceiling | USD 5 million over four years | USD 75 million in each 12-month period |
| Tiers | Single tier | Tier 1: up to USD 20 million · Tier 2: up to USD 75 million |
| Filing | Form NOR on EDGAR (no SEC qualification) | Form 1-CRYPTO offering statement (SEC qualification required) |
| Financial statements | Not required | No audit requirement at Tier 1; audited statements at Tier 2 |
| Ongoing reporting | None; Form TR at the end of four years | Form 1-KC (annual), Form 1-SC (semiannual), Form 1-UC (current) |
| Who may use it | Entities, individuals or groups; once per asset | Issuers organised in and principally administered from the United States |
| Investor limit | No accredited investor requirement | Non-accredited investors capped at 10% of the greater of income or net worth |
Under both exemptions the issuer becomes subject to a principles-based disclosure regime tailored to crypto assets, and the federal antifraud and antimanipulation provisions continue to apply.
The genuinely valuable part: a ten-topic disclosure regime
For me the most valuable element of the proposal is not the numbers but the rule defining what has to be disclosed. The issuer’s narrative must cover material information across ten topics: the terms of the investment contract and the essential managerial efforts the issuer has undertaken; the terms of the offering; the crypto asset itself; management, related-party transactions and conflicts of interest; the associated network or application and the plan of development; security and source code; token economics and allocation; governance mechanisms; the ecosystem; and risk factors.
That list looked familiar to me, because these are the headings a good token report should already contain. The difference is this: until now you decided for yourself in what order, at what depth and for whose benefit to write them. The proposal puts that on common ground. It also requires the disclosure to be consistent with the issuer’s own public communication channels — its website, its official social media accounts and promotional materials such as a whitepaper. In my experience that is precisely one of the most frequent sources of trouble: the gap between what the legal document says and what the marketing copy promises.
The safe harbor: an exit from Howey
The most consequential piece is a conditional safe harbor from the “investment contract” definition. If the issuer has completed or permanently ceased all of the essential managerial efforts it promised under the investment contract, is making no new such promises and does not intend to, it may delink the asset from the investment contract by filing a Form TR on EDGAR containing a certification to that effect together with a supporting analysis.
Why this matters is easiest to see through the analysis itself. The decisive element in Howey is the efforts of others. Where a token depends on a team’s continuing development, marketing and treasury management, that element is satisfied. As the network matures and the team steps back, the link weakens — but who determines that it has weakened, when, and by what procedure has until now been unclear. The proposal supplies a procedure: certify, analyse, file.
Two limits are worth recording. First, the safe harbor addresses only the investment contract prong of the statutory definitions; it does not say the asset could never be a security on some other theory. Second, the mechanism rests on self-certification: the Commission may revisit the certification afterwards, and the safe harbor does not retroactively cleanse earlier transactions.
What this means for tokenized real-world assets
The condition attached to the safe harbor produces a distinctive result for tokenized real-world assets. In an RWA structure the issuer usually performs continuing work: servicing the asset, holding it in custody, valuing it, distributing income. For as long as that work continues, the condition of having permanently ceased essential managerial efforts is not met.
Securities status is therefore tied not to the technical form of the token but to the actual division of labour between issuer and token holder. That strikes me as the right anchor: tokenisation is a record-keeping technology and does not by itself change legal character. The practical consequence is that for an RWA issuer providing continuing services the exit door is effectively closed, and the right question is not “how do I stop being a security” but “under which exemption, and with what reporting infrastructure, do I live as one”. That distinction also drives the choice between the two exemptions according to the size of the raise.
I am grateful to Fractalized Tokenization Labs for their reading of the proposal; the framing that ties the safe harbor to the division of labour rather than to token format comes from there.
What changes for exchanges and launchpads
It should be said at the outset that the proposal does not regulate exchanges or intermediaries directly; the Commission notes only that further action may be warranted. The indirect effect, however, could be substantial.
First, a common language. The ten-topic disclosure set could become the common denominator of the listing file that each exchange currently defines for itself. Once an issuer has prepared it, answers for different exchange templates can be derived from a single body of work. That is where I have lost the most time in practice; a shared core would be a real relief.
Second, ongoing reporting. Issuers using the fundraising exemption would file annual, semiannual and current reports. That is a natural feed for the post-listing monitoring exchanges are expected to perform — information they mostly gather today by asking the issuer separately, in non-standard formats.
Third, state law. The proposal treats investment contracts sold under Regulation Crypto Assets as covered securities, preempting state registration and qualification requirements, while the antifraud provisions of blue sky law survive. The critical detail is that for secondary market transactions this preemption depends on the issuer remaining current with its disclosure, filing and periodic reporting obligations. Fall behind on reporting and the preemption lapses. For a token whose liquidity depends on secondary markets that is a direct commercial risk, and it belongs in the listing agreement.
For launchpads the picture is mixed. On one hand the startup exemption — up to USD 5 million over four years, no accredited investor requirement and general solicitation permitted — sits fairly close to how launchpads already work. On the other, it may be used only once for the same asset and requires a transition report at the end of four years. The launchpad round becomes a structure with a clock attached: not “we ran the sale and that was that”, but “we ran the sale, and within four years we either complete what we promised or explain why we did not”.
Seen from Türkiye
There is an important asymmetry. On the reported terms, the fundraising exemption requires the issuer to be organised in the United States, a majority of its officers and directors to be U.S. citizens or residents, more than half its assets to be located in the United States and the business to be principally administered there. The startup exemption carries no such nexus requirement and is open to individuals and groups as well as entities.
If that holds in the final text, the practical consequence for a Türkiye-based team is that the U.S. framework is reachable for a small first raise, while the repeatable, larger-scale funding channel puts the question of U.S. redomiciliation on the table. That is a corporate structuring and tax decision as much as a legal one, and it should not be taken before the final text is known.
The second point is that this is a U.S. rule and it does not alter obligations in Türkiye. The crypto asset service provider regime, the Capital Markets Board’s advertising and campaign rules and local listing practice all continue on their own track. Relying on a U.S. exemption creates no exemption in Türkiye.
Questions left open
The proposal is not final and several points remain open.
The first is how the test of having completed or permanently ceased essential managerial efforts will be applied in practice. The boundary between a team that has stopped developing and a foundation that continues maintenance work will be contested. The second is the risk a self-certification model places on the issuer: if the certification is wrong, the consequence may not be limited to losing the safe harbor. The third is that exchanges and intermediaries are left unaddressed, so clarity on the issuance side sits alongside continuing uncertainty in the secondary market — a gap in the middle of the chain. The fourth is how the proposal will coexist with the broader legislation pending before Congress.
Conclusion
This proposal is an attempt to end the period in which the only reliable way to learn whether a token is a security was to become the subject of an investigation. It is not perfect: its scope is narrow, its mechanism rests on certification, and it leaves the secondary market open. But as someone who has had to answer the same question from scratch every time for years, I think it matters that a framework in which the answer can be known in advance is now on the table. The comment period runs for 60 days, and it would be valuable for teams working in this area — particularly those who know the operational realities on the exchange and launchpad side — to file comments.
Sources
- SEC, “SEC Proposes New Regulation Crypto Assets”, Press Release 2026-76, 18 August 2026.
- Proposing release: releases 33-11434 / 34-106150, File No. S7-2026-27.
- Statements of Chairman Paul S. Atkins and Commissioners Hester M. Peirce and Mark T. Uyeda, 18 August 2026.
- For the detailed mechanics, the analyses published by Morrison & Foerster and Securities Lawyer 101.
The thresholds, form names and conditions described here are compiled from the SEC’s own publications and from public analyses of them. The final text may change following the comment process; what binds is the proposing release itself as published in the Federal Register.
This article is provided for general information only and does not constitute legal advice. Please seek legal support for an assessment of any specific matter.
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