A proposed SEC framework could give crypto projects new ways to raise capital in the United States and establish when a token is no longer subject to an investment contract. The details will determine whether those options are practical for the businesses expected to use them.
In its October 20, 2026 comment letter, the Blockchain Association supports Regulation Crypto Assets while urging changes to fundraising limits, transition procedures, and protections for secondary trading. For token issuers, the letter identifies decisions that belong in launch planning now, even though the proposed exemptions are not yet available.
As of October 21, 2026, Regulation Crypto Assets remains a proposal. The SEC issued it on August 18, and the comment period closed October 20. Businesses should distinguish the proposed rules, existing SEC interpretations, and the additional changes the Association is requesting.
New fundraising options would carry conditions
The SEC fact sheet describes a startup exemption permitting up to $5 million in offerings over a four-year period. A separate fundraising exemption would permit up to $20 million under Tier 1 or $75 million under Tier 2 during a 12-month period.
Both exemptions would require disclosures tailored to the offering. The fundraising exemption would also require financial statements and ongoing reporting, with audited financial statements for Tier 2. Antifraud and antimanipulation provisions would continue to apply.
The Association asks the SEC to increase the startup limit to $10 million and the Tier 2 limit to $150 million, and to exclude specified network distributions from the startup cap.
For founders, the practical question is how a proposed exemption would fit the entire financing plan. Counsel should evaluate public token sales alongside private financing, employee allocations, and community distributions. A fundraising target alone does not establish eligibility, and the cost of preparing disclosures should be part of the budget.
The token and the investment contract require separate analysis
The framework builds on the SEC’s March 2026 interpretation, which distinguishes a crypto asset from the investment contract through which it may be offered. An asset that is not itself a security can nevertheless be sold through an investment contract when the transaction satisfies the Howey test. The interpretation also addresses circumstances in which that relationship ends. It does not replace Howey or binding judicial precedent.
That distinction matters when a project describes its token as a utility token. Counsel must also examine what purchasers were told, what they reasonably expect, and which efforts the development team has undertaken to provide. Tokenized stock or debt requires its own analysis; placing an existing security on a blockchain does not eliminate its securities status.
Development promises will shape the transition analysis
Under the proposed safe harbor, the issuer would need to complete or permanently cease all essential managerial efforts it represented or promised, refrain from making or intending new such promises, and file a transition report with supporting analysis.
The Association seeks objective, nonexclusive indicators of when those efforts have ended, including evidence of network functionality and the absence of unilateral control.
Existing SEC staff FAQs already distinguish certain maintenance and improvements to functional systems from essential managerial efforts. They also explain that whether an issuer has fulfilled its promises depends on how it described the promised functionality or decentralization. Those FAQs are staff guidance without independent legal force.
Our practical recommendation is to preserve a clear record of development commitments and their completion. A white paper, investor presentation, and founder interview can describe the same project differently. Reviewing those communications together helps identify commitments that remain outstanding and prevents a technical milestone from being mistaken for a complete legal analysis.
A transition filing would not be an SEC approval
The proposed rule would use Form TR for transition reporting. Filing would satisfy the applicable filing requirement without mandatory SEC review, but the SEC could still challenge whether the substantive safe harbor conditions were met. Form TR would also serve purposes other than claiming the safe harbor, so the existence of a filing alone would not establish successful transition.
The Association seeks protections against treating a filing as an admission of past securities status, a third-party filing route for legacy assets, and protection for intermediaries relying reasonably on qualifying filings.
For an existing project, we would review any proposed transition disclosure against the historical offering record before submission. The analysis should explain the relevant facts accurately and consistently. A statement about present conditions should not casually characterize every earlier transaction or imply that historical liability has been resolved.
Secondary trading needs its own compliance analysis
The proposal expressly leaves recommendations for exemptions from exchange, broker, and dealer definitions for further consideration. Its state-law preemption provisions concern registration and qualification of covered offerings and certain secondary transactions; they do not provide a general exemption from every state regulatory requirement.
The Association’s public summary of its recommendations emphasizes stronger state preemption and resolution of intermediary registration questions.
For a project seeking exchange access, our recommendation is to plan the offering and anticipated trading arrangements together. Identify the proposed venues, who will provide liquidity, whether anyone will hold customer assets, and which jurisdictions are involved. Each participant needs a basis for its own activities. An issuer’s offering analysis cannot substitute for that work.
Preparing a token project while the rules develop
Projects considering a U.S. launch should first establish a lawful route under the rules available today. They can then evaluate how a final Regulation Crypto Assets might change the financing or distribution plan. Teams with tokens already circulating should update their factual records, preserve prior marketing materials, and examine who retains authority over the network.
Kelman PLLC advises digital asset businesses on securities regulation and token offering analysis, including offering materials, token economics, and public communications. If you are planning a token launch or reassessing an existing project, contact Kelman PLLC to discuss the applicable requirements and how this proposal may affect your plans.
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