At a glance
- The public comment period on the Securities and Exchange Commission’s proposed Regulation Crypto Assets closed on Tuesday, 20 Oct, according to the SEC’s rule page. The plan would let crypto projects raise up to $5 million over four years, or up to $75 million a year, without full registration.
- Industry letters on file ask for clear airdrop rules and a safe harbor that projects can actually use. A letter from John Reed Stark and Lee Reiners asks the SEC to withdraw the proposal entirely.
The SEC issued the proposal on 18 Aug under file number S7-2026-27, and it was published in the Federal Register on 21 Aug with comments due on 20 Oct, the release shows. A comment period is the window in which anyone can tell an agency what is wrong with a draft rule before it decides whether to adopt it.
What the rule says
The proposal has two offering exemptions. The first covers raises of up to $5 million in a four-year period; the second allows up to $75 million in any 12 months, but adds financial statements and ongoing reports. Issuers under both would publish principles-based narrative disclosures and stay subject to the anti-fraud rules, the release says.
The third piece is a conditional safe harbor. If its conditions are met, a token is deemed not to be subject to an investment contract, which is the test that makes an asset a security under US law.
More than 100 submissions had been filed by Tuesday, The Block reported. The SEC’s public comment file showed letters posted through 19 Oct when CryptoWatchDesk checked it at about 19:55 UTC.
What industry says
The Hyperliquid Policy Center said it supports the proposal and wants it adopted promptly, but that several features, as drafted, would not deliver the certainty the SEC intends. It made five recommendations.
It wants the SEC to write into the rule that an airdrop is not a security when recipients give nothing of value for the tokens. It also wants the safe harbor to work without what it called “a tacit admission of prior investment-contract or issuer status”, and to protect projects while their teams are still building.
Bitwise, which runs crypto ETFs but issues no tokens, asked for a test that outsiders can apply from public information. Funds need it to decide which tokens they may hold, the asset manager said.
The Alternative Investment Management Association, which represents hedge and private-market funds, asked the SEC to extend the safe harbor to the Advisers Act and Investment Company Act. It also wants public records of each token’s status and a safe harbor for fund resales.
What critics say
Stark, the founding chief of the SEC’s Office of Internet Enforcement, and Reiners, a lecturing fellow at the Duke Financial Economics Center, called for withdrawal. Their letter argues the plan lets issuers “certify their tokens out of Commission oversight on terms the issuers themselves write”. It predicts a court challenge if the rule is adopted in anything like its current form.
Other US rule fights are running in parallel; see the CFTC’s reply in CME’s perpetual futures suit and the SEC’s crypto custody proposal.
What happens next
SEC staff now read the file and recommend a final rule, changes or a fresh proposal; there is no statutory deadline for the Commission to vote. Letters that arrive late can still be posted.
Who votes matters too; this desk looked at the SEC’s quorum problem in early October. The next fixed date on the US crypto calendar is in the week-ahead calendar.
This article is for information only and is not investment advice.