The SEC has finally offered a way out for hundreds of crypto projects caught in securities regulations. Under a new framework named “Reg Crypto”, the agency estimates that around 475 token issuers will submit transition reports under the safe harbor each year to escape the clutches of investment contract laws.
According to research from Galaxy Research dated August 21, 2026, this proposal has the potential to end years of regulatory uncertainty. Alex Thorn, head of firmwide research at Galaxy, emphasized that the first visible impact will be the resolution of regulatory disputes for already circulating tokens. This rule is not designed to spark a wave of new public token sales.
The SEC’s internal projections reinforce that view. They project only about 130 offerings per year coming through two new fundraising exemption pathways - a figure that lags far behind the 475 legacy issuers seeking an exit.
What Are the Requirements for Exemption?
This safe harbor is specifically aimed at crypto assets that are not inherently securities, but were initially sold as part of an investment contract package. The key lies in the completion of promised work by the project issuer.
Once the issuer completes all promised essential managerial work, the investment contract is considered concluded. The issuer then only needs to file a Form TR document with the SEC. The agency estimates that preparing the transition report will take an average of only 30 working hours. Tokens that successfully meet these requirements can continue to operate and be traded without being bound by their original contract.
There are mandatory disclosure rules that must be met. Issuers must release details about the token supply, release schedule, minting and burning mechanisms, governance, smart contract access rights, and their project’s source code.
Two New Exemption Pathways
In addition to resolving cases for legacy tokens, Reg Crypto also proposes two exemptions from the registration requirements of the Securities Act of 1933. The first path is a startup route with a maximum funding limit of $5 million over four years. The second path mimics the Reg A format, divided into Tier 1 at $20 million per year and Tier 2 at $75 million per year.
To protect retail investors, purchase limits for non-accredited investors are capped at a maximum of 10% of their annual income or net worth. On the plus side, tokens sold through these exemptions will not be labeled as restricted securities. Investors have the full right to immediately resell their assets without violating federal holding period rules.
This framework provides certainty for the US crypto industry, but it remains just an agency proposal. As Thorn highlighted the reality: “Reg Crypto can provide meaningful regulatory clarity, but only Congress can make that clarity permanent.”
Reported from crypto.news.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
