SEC Proposes New Rule to Regulate Crypto Assets
The Securities and Exchange Commission (SEC) has proposed a new rule to regulate crypto assets. On August 18, 2026, SEC Chairman Paul Atkins announced Regulation Crypto Assets (Reg CA), which aims to provide clear pathways for crypto asset entrepreneurs and market participants to raise capital under federal securities laws.
The proposal includes two exemptions from the registration requirements of Section 5 of the Securities Act: the startup exemption and the fundraising exemption. These exemptions would be available to covered investment contracts, defined as a contract involving a crypto asset that constitutes an investment contract, provided the crypto asset is subject to the investment contract and no other assets are involved.
The proposed rule also includes tailored disclosure requirements for issuers relying on these exemptions, a safe harbor codifying the SEC's March 2026 guidance on when crypto assets issued pursuant to an investment contract separate from that contract, and a provision preempting state law registration and qualification requirements for covered investment contracts issued pursuant to a Reg CA exemption.
The SEC has been grappling with the status of crypto assets under federal securities laws. The Howey test, established in 1946, defines an arrangement as an investment contract if it involves a contract or scheme where a person invests money in a common enterprise with an expectation of profit derived from others' efforts.