The SEC Just Sent Its Crypto Safe Harbor Plan to the White House — Here’s What’s in It

TLDR

• SEC Chair Paul Atkins confirmed the Regulation Crypto Assets proposal is now at the White House’s Office of Information and Regulatory Affairs (OIRA) for review
• The proposal includes a startup exemption, a fundraising exemption, and an investment contract safe harbor
• The startup exemption would allow crypto projects to raise capital over four years with lighter disclosure rules
• The investment contract safe harbor would protect certain assets from being classified as securities once a project team stops its managerial efforts
• Atkins also mentioned a separate innovation exemption that could act as a regulatory sandbox for onchain assets

The SEC’s crypto safe harbor proposal is one step closer to becoming official. SEC Chair Paul Atkins confirmed Monday that the Regulation Crypto Assets proposal has been submitted to the Office of Information and Regulatory Affairs, known as OIRA. This is the stage just before a rule gets published in the Federal Register for public comment.

Atkins made the announcement at a digital assets summit hosted by Vanderbilt University and the Blockchain Association. He said the proposal would be published “shortly.”

The proposal was first introduced by Atkins in mid-March. It is designed to give crypto projects more room to operate before they are required to register with the SEC.

The framework covers three main areas. First, a startup exemption would allow projects to raise up to a defined amount over a four-year period, with reduced disclosure requirements.

Second, a fundraising exemption would let issuers raise a set amount over 12 months while still being able to use other registration exemptions under federal securities law.

Third, an investment contract safe harbor would protect certain digital assets from being classified as securities once the project team has completed all the efforts it promised investors.

What the Token Taxonomy Means for the Industry

In March, the SEC also released token taxonomy guidance. It was the first time the agency laid out clear parameters in one document for when digital assets would be considered securities. Atkins said the safe harbor proposal is designed to work alongside that guidance.

Atkins said the SEC wants to hear from the marketplace to make the proposal “workable.” He also said the agency is building additional measures into the package beyond the three main exemptions.

Separately, the SEC is developing an innovation exemption that would work like a regulatory sandbox for onchain assets. This idea has drawn pushback from traditional finance institutions, who argue broad exemptions could weaken investor protections and market oversight.

Debate Over Regulatory Approach

Citadel Securities has called on the SEC to use standard notice-and-comment rulemaking. The Blockchain Association pushed back on Monday, saying traditional rulemaking is not required and that the SEC has previously relied on exemptions.

Atkins said the agency has the authority to pursue an exemption and that parameters around the innovation exemption would be released soon.

Meanwhile, Congress is working on broader crypto legislation. Atkins said legislation is important because rules made by regulators can be reversed by future administrations. Agency rules, unlike laws, are more vulnerable to being undone.

The OIRA review is a standard step in the federal rulemaking process. Once complete, the proposal will be published in the Federal Register and opened for public comment.

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