SEC unveils major crypto overhaul with startup and funding relief

US Securities and Exchange Commission Chair Paul Atkins has outlined a set of exemptions that could ease regulatory pressure on digital asset firms while still keeping them within the federal framework.

His comments came as the commission laid out a new direction for how it plans to oversee the crypto sector.

Atkins presented the framework at the DC Blockchain Summit in Washington, describing it as an attempt to bring existing securities rules in line with how blockchain-based markets operate today. 

Rather than relying heavily on enforcement actions, the agency is now moving toward clearer rules that define how different types of crypto activity should be treated.

The first part of the framework outlines a “fit-for-purpose startup exemption” targeting early-stage projects.

Under this provision, developers would be allowed to raise up to $5 million over four years without having to complete full securities registration. 

Atkins said such relief would give projects a “regulatory runway” to reach maturity, allowing teams to focus on building out their networks before facing the full weight of compliance requirements. 

To qualify, firms would need to provide “principles-based disclosures” through public channels, reflecting a model already familiar to the industry through white papers.

Beyond early-stage projects, the proposal also outlines a “fundraising exemption” designed for more developed firms. 

This pathway would allow issuers to raise up to $75 million within a 12-month period, while meeting more structured disclosure requirements, including financial documentation. 

Another key part of the framework is the “investment contract safe harbor,” which seeks to address when a token should no longer be treated as a security. 

Atkins said a digital asset could move outside securities laws once the issuer has “permanently ceased all essential managerial efforts” that were originally tied to investor expectations. 

The provision is meant to bring clarity to a long-standing question around how tokens evolve as networks become more decentralised.

Atkins added that the SEC is preparing to release draft rules for these exemptions for public comment in the coming weeks, but acknowledged that “only Congress can ensure that regulation in this area is future-proofed through comprehensive market structure legislation.”

SEC issues guidance

On the same day, the SEC and the Commodity Futures Trading Commission issued a joint interpretation outlining how crypto assets should be classified under federal law. 

The agencies said the guidance would introduce a “coherent token taxonomy” covering digital commodities, digital collectables, digital tools, stablecoins, and digital securities.

The interpretation also addresses how a “non-security crypto asset” may be assessed under investment contract rules and provides clarity on activities such as “airdrops, protocol mining, protocol staking, and the wrapping of a non-security crypto asset.”

In prepared remarks, Atkins noted that “only one crypto asset class remains subject to the securities laws,” identifying it as “traditional securities that are tokenized.”

As previously reported by Invezz, the SEC is also working to resolve uncertainty tied to existing rules. 

The agency is seeking public feedback on proposed changes to Rule 15c2-11, which would limit broker-dealer reporting requirements in over-the-counter markets to equity securities.

Earlier interpretations had raised concerns that the rule could extend to crypto assets.

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