SEC Moves Closer to Crypto Framework on Token Fundraising

• SEC moves “Reg Crypto” proposal to final stage, targeting token fundraising.
• Startup exemption allows raises up to $5M alongside a whopping $75M annually.
• Meanwhile, the safe harbor framework defines when tokens transition out of securities status.

The US Securities and Exchange Commission (SEC) is moving closer to a formal crypto framework. Chair Paul Atkins confirmed that a “Reg Crypto” proposal is now under White House review, placing it one step away from release.

The rule targets token fundraising, startup exemptions, and clearer definitions around what qualifies as a security.

Reg Crypto Targets Fundraising Clarity

The proposed framework focuses on capital formation under the Securities Act of 1933. At its core is a new exemption structure for crypto projects.

A startup exemption would allow early-stage teams to raise up to around $5 million under a time-limited window, estimated at up to four years.

A separate fundraising exemption would allow raises of up to roughly $75 million within a 12-month period. Instead of full registration, projects would follow simplified disclosure requirements, including financial condition and basic reporting.

The goal is to let projects raise capital through tokens without forcing them into traditional securities registration from day one.

The framework also introduces a safe harbor mechanism. This allows projects to signal when a token transitions from a security to a non-security as decentralization increases.

It creates a defined path instead of leaving projects in regulatory uncertainty. Interestingly, the proposal aligns with Section 103 of the Senate’s Clarity Act, which outlines a similar capital-raising exemption with disclosure rules and fundraising caps.

DeFi Innovation Exemption in Focus

Alongside Reg Crypto, the SEC is preparing an “innovation exemption” under the Securities Exchange Act of 1934. This exemption targets decentralized finance.

It would allow limited on-chain trading of tokenized securities through decentralized platforms, including automated market makers, without immediately triggering full broker-dealer or exchange registration.

The structure acts as a regulatory sandbox. Both traditional financial firms and crypto-native projects can test models under defined limits. Atkins said the goal is to enable experimentation without disadvantaging existing players or restricting new entrants.

Coordination With CFTC and Policy Push

The SEC is also coordinating with the Commodity Futures Trading Commission through a new Memorandum of Understanding.

The agreement focuses on reducing regulatory overlap, clarifying product definitions, and aligning enforcement across agencies.

This comes as broader legislative efforts in Washington continue to move slowly. Atkins emphasized that rulemaking is progressing regardless of delays in Congress.

The SEC Chair also pointed to political risk as a key variable. He warned that changes in Congress could disrupt regulatory momentum, urging industry participants to stay engaged in the 2026 midterm elections.

He claimed that the regulatory progress depends not just on agencies, but on maintaining political alignment in Congress.

Related: US Senators Question SEC Chair Atkins Over Enforcement Chief’s Sudden Resignation