SEC Proposes New Rules for Crypto Assets
The SEC proposed Regulation Crypto Assets, offering two exemptions for token sales and a pathway for tokens to exit securities treatment.
The U.S. Securities and Exchange Commission proposed new rules on August 18, 2025, that would create tailored exemptions for crypto asset offerings, marking the agency’s shift from enforcement-driven oversight to structured regulation. The proposal, called Regulation Crypto Assets, offers two fundraising pathways and a mechanism for tokens to eventually exit securities treatment.
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Two Exemptions for Token Offerings
The proposed rules include two exemptions from registration requirements under the Securities Act of 1933, according to the SEC’s official press release. The first exemption permits offerings of up to $5 million during a four-year period. The second allows offerings of up to $75 million during a 12-month period.
Both exemptions are designed specifically for investment contracts involving crypto assets, a category the SEC has used to assert jurisdiction over token sales. The rules aim to provide what Commissioner Mark Uyeda called “fit-for-purpose” pathways, replacing what he described as the agency’s prior “regulation by enforcement” approach that began ending on January 20, 2025.
When a Token Stops Being a Security
The proposal addresses a question that has loomed over the crypto industry: when does a token that was sold as part of an investment contract stop being a security? According to the SEC’s framework, a token can exit securities treatment once the team has completed or permanently abandoned the managerial efforts it promised investors.
Commissioner Hester Peirce, in her statement on the proposal, described the rules as creating “fundraising pathways tailored for the unique characteristics of crypto assets being sold as part of investment contracts.” Tokens would transition out of securities law once the underlying project no longer depends on the promoter’s efforts for value.
Regulatory Clarity and Market Timing
The proposal arrives as Congress has stalled on broader digital asset legislation. The CLARITY Act, which would establish a more comprehensive framework, remains pending. The SEC’s move fills that vacuum, offering immediate guidance to projects that have waited years for regulatory certainty.
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Under Republican leadership, the SEC ended a crackdown on the crypto industry in early 2025, rescinding stringent accounting guidance and dismissing lawsuits against Coinbase and Binance, according to Reuters. The proposed rules represent the constructive phase of that pivot: not just withdrawing enforcement, but building a regulatory on-ramp.
Commissioner Caroline Crenshaw voted against the proposal, but three commissioners supported it. The rules are now open for public comment before final adoption.
What Traders Can Price Now
The SEC’s proposal creates discrete horizons for prediction markets. The four-year and 12-month windows in the two exemptions are time-bound thresholds that binary contracts can cleanly map. Traders pricing compliance timelines now have official SEC benchmarks rather than speculative legislative calendars.
The vote itself—three commissioners in favor, one against—signals the proposal will likely survive the comment period in substantially similar form. That narrows the range: the question is no longer whether the SEC will offer a regulatory pathway, but when final rules take effect and how projects deploy them.
For markets pricing broader crypto regulatory clarity, the proposal shifts the baseline. What was once enforcement risk is now a compliance question with defined dollar limits and exit criteria.
FAQ
What are the two exemptions in the SEC’s proposed crypto rules?
The first exemption allows token offerings up to $5 million over a four-year period. The second permits offerings up to $75 million over a 12-month period. Both are specifically for investment contracts involving crypto assets and exempt issuers from full Securities Act registration.
When does a token stop being treated as a security under the proposed rules?
A token can exit securities treatment once the development team has completed or permanently abandoned the managerial efforts it promised to investors. The SEC’s framework ties securities status to ongoing reliance on the promoter’s efforts for value.
How does this proposal affect prediction markets?
The proposal creates time-bound compliance thresholds that binary contracts can price. Traders can now price when projects will meet exemption limits, when tokens will exit securities treatment, and whether Congress will pre-empt the SEC with broader legislation like the CLARITY Act.