Key Highlights
- SEC moves closer to “reg crypto,” aiming to clearly define which crypto deals qualify as securities for fundraising.
- New startup exemption could let crypto projects raise funds over four years with simpler rules and required disclosures.
- SEC seeks balance between investor protection and innovation as it builds clearer, structured crypto fundraising rules.
The U.S. Securities and Exchange Commission (SEC) is close to unveiling a new “reg crypto” plan to clarify rules for raising money in the crypto industry.
Chair Paul Atkins said Monday the proposal is now with the White House Office of Information and Regulatory Affairs, one step away from being public. The plan aims to make it clear which crypto transactions count as securities and which do not, while giving startups a more straightforward way to raise funds.
Speaking at an event with Blockchain Association at Vanderbilt University, Atkins stressed the need to balance investor protections with the growth of new projects.
The new rule will include a “startup exemption” that lets crypto projects raise funds over four years, as long as they meet certain disclosure requirements. “We’ll have reg crypto that we’ll be proposing here shortly. It’s in fact at OIRA right now, which is the next step before being published, so that’s exciting,” Atkins said.
The exemption creates a safe space for early-stage projects to get funding without having to register fully as securities right away. This gives startups a transitional pathway as they develop and move toward decentralization.
Structured guidance for token issuance
In addition to the startup exemption, the SEC plans an “investment contract safe harbor” based on its March token taxonomy guidance. This aims to clarify which early-stage token offerings fall under securities rules and which do not.
It also aligns with a capital-raising exemption in Section 103 of the Senate’s CLARITY Act, letting projects raise funds in a structured way while keeping oversight.
The SEC is also working on an “innovation exemption,” which could act like a regulatory sandbox for on-chain assets. The idea has drawn mixed reactions. Traditional finance firms, such as Citadel Securities, want formal rulemaking, warning that broad exemptions could weaken investor protections.
Meanwhile, the Blockchain Association says the SEC already has the authority to grant exemptions and argues blockchain infrastructure should be treated differently from brokers or exchanges. As a result, misclassifying these systems could slow the growth of tokenized finance.
Interagency coordination and legislative challenges
The SEC and CFTC also announced a Memorandum of Understanding last month to align rules and share information. Atkins said this move helps cut overlapping regulations and gives the market clearer guidance.
However, he stressed the need for laws to back the rules, noting, “We can do a lot regulatorily, but we just have to make sure it takes root and can’t be done away with.”
With broader crypto legislation still delayed in Washington, the industry continues to rely on temporary frameworks to manage fundraising, decentralization, and investor protections.
Also Read: Bill Hagerty Says Senate Could Advance Crypto Bill in April