SEC to Accept Public Comments on Crypto Asset Regulation Until October 20

The U.S. Securities and Exchange Commission (SEC) has proposed a regulation for crypto assets, known as Regulation Crypto Assets (Reg CA), and will accept public comments until October 20. This proposal focuses more on how to clarify the investment contract status of existing tokens rather than fully reopening the market for new token issuances.

The SEC proposed Reg CA on August 18, 2026, and it was published in the Federal Register on August 21. Currently, it is in the comment phase and has no legal effect.

Reg CA is a rule aimed at creating a securities issuance framework tailored to certain investment contracts related to crypto assets. The SEC's official explanation includes a startup exemption allowing up to $5 million (approximately 680 million KRW) over four years and a fundraising exemption allowing up to $75 million (approximately 1.027 trillion KRW) for 12 months.

The original proposal divides the fundraising exemption into two tiers. Tier 1 allows for $20 million (approximately 27.4 billion KRW) over 12 months, while Tier 2 has a cap of $75 million over the same period.

The startup exemption begins after the submission of Form NOR. It also includes a one-time mechanism to prevent the same issuer and related parties from repeatedly using the same asset or substantially similar crypto assets.

For this reason, it is difficult to interpret Reg CA as a signal of a so-called 'ICO 2.0.' The startup exemption is limited in amount and duration, and the fundraising exemption is subject to requirements for entities organized under U.S. law and operating primarily in the U.S.

The fundraising exemption stipulates that a majority of executives and directors must be U.S. citizens or residents, and more than 50% of the assets must be located in the U.S. There is also a 10% investment limit for non-accredited investors.

The key provision is Rule 400. It provides a safe harbor stating that if the issuer has completed or permanently ceased the core management activities promised to investors and does not make new promises while submitting Form TR, the relevant crypto asset will no longer be considered tied to an investment contract.

However, this does not mean that the token itself is automatically exempt from all regulations. The SEC proposal leaves a structure where compliance with conditions can be contested later.

Rule 500 is also a point of contention. This provision aims to exclude the registration and qualification requirements of state securities laws for securities issued under Reg CA and certain secondary market transactions.

The exclusion of state law operates only while the issuer maintains its disclosure and reporting obligations in the present tense. There is also a possibility that the scope of the exclusion may be adjusted in the final proposal.

SEC Commissioner Paul S. Atkins stated in a press release on August 18 that Reg CA is a proposal aimed at providing capital raising pathways under federal securities laws for crypto asset companies and market participants. He also indicated that long-term rules would require congressional legislation.

Industry reactions have been mixed, with both welcome and caution. Reuters reported that Summer Mersinger, CEO of the Blockchain Association, evaluated Reg CA as an important step toward clear rules needed in the U.S. digital asset market.

In the same report, Cody Carbone, CEO of the Digital Chamber of Commerce, stated that they would work with the SEC for onshoring in the U.S. However, some in the industry pointed out that congressional legislation is necessary for long-term certainty.

The legal community sees the safe harbor and state law exclusion as key issues. Davis Wright Tremaine analyzed on August 26 that Reg CA includes startup exemptions, fundraising exemptions, investment contract safe harbors, and exclusions from state law registration requirements.

The Duke FinReg Blog pointed out that Rule 400 heavily relies on the issuer's self-certification, and Rule 500 could weaken the preemptive intervention of state regulatory agencies. This illustrates the tension between federal rules focused on disclosure and state-level investor protection measures.

For domestic readers, the crucial point is not whether the door to new token issuances has been immediately opened. The issue is how tokens already circulating in the U.S. market can claim to have exited the status of 'investment contracts' and what impact that claim will have on exchange listings and secondary market transactions.

This proposal concretizes the SEC's earlier discussions on token safe harbors and issuance exemptions in the form of a rule. The fact that token fundraising can be handled within the framework of securities regulation connects to Blockstack's Regulation A+ style token issuance case.

Reg CA is an administrative rule proposal. Public comments will be accepted until October 20, 2026, after which it will undergo revisions and final voting procedures.

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