The United States Securities and Exchange Commission (SEC) has proposed a new framework called “encrypted asset regulation”, which seeks to provide a clearer path to fund-raising under the United States Federal Securities Act for some encryption projects. This is taking place at a time when Congress is moving slowly towards legislation on the structure of the digital asset market, and regulators are beginning to advance operational rules.
Two types of fund-raising exemption are proposed simultaneously.
According to the proposal, two types of customization exemptions are proposed for investment contracts involving encrypted assets.
The first category allows the issuer to raise up to $5 million over four years, a ceiling that covers the full four-year cycle instead of $5 million per year. The second category allows the issuer to raise up to $75 million within an arbitrary period of 12 months.
Both types of exemptions require principled disclosure to investors. A larger exemption would also require the issuer to submit financial statements and to fulfil its ongoing reporting obligations. At the same time, it was emphasized that the existing anti-fraud and anti-market manipulation provisions would continue to apply.
Proposed inclusion of safe ports of tokens
The proposal also included a conditional “safe harbour” arrangement to clarify the circumstances under which encrypted assets could no longer fall under the control of investment contracts.
It is envisaged that in the future, if the issuer meets the relevant conditions, the encrypted assets can be distinguished from the original corresponding investment contract. The design of the SEC is a continuation of its thinking in its joint interpretation with the United States Commodity Futures Trading Commission (CFTC) in March 2026.
That interpretation had shown how an encrypted asset, which was not a security in itself, was bound by the rules of the investment contract as a result of a fund-raising arrangement and how that relationship ended. The joint explanation at the time also proposed a digital asset classification approach, covering digital goods, digital collections, digital tools, stable currencies and digital securities, as well as scenarios such as air drops, conventional mining, pledge and sealing.
The Strangling of Congressional Legislation
The Chairman of SEC, Paul Atkins, said that the proposal sought to respond to the long-standing problem faced by the encryption business team, namely, how to raise funds legally for development work when the network was not yet in place. He claims that the SEC supports Congress in moving forward on the Digital Asset Market Clarity Bill, but that the Commission can also act under existing statutory powers when legislative negotiations are still pending.
Atkins also stated that the new framework would help to reduce the incentive for encryption firms to move overseas and to make the United States more attractive to encryption development teams. SEC Commissioner Hester Pierce also supported the proposal, arguing that an initial waiver of $5 million, an exemption of $75 million in fund-raising, and a conditional safe harbour would help to establish clearer rules for encrypted distribution.
However, Pierce also noted that the framework did not necessarily apply to all business models and called on the market to submit feedback during the 60-day public consultation period.
The Clarity Bill is still pending.
At the time of the launch, the United States Congress was still discussing the CLARITY Bill. The bill was originally intended to create a more complete statutory framework for the digital asset market structure, but the Senate was unable to move the bill forward before the August recess.
According to the report, Senator Cynthia Lummis indicated that the Senate planned to vote on the bill after its resumption on 15 September. At the same time, the market ' s expectation that the relevant legislation would be completed in 2026 has fallen.
SEC indicated that the proposal would be open for a 60-day public consultation period after its publication in the Federal Gazette.