SEC Regulation Crypto Assets: 100+ Comments Filed — Safe Harbor Under Fire and What's Next

What Happened: 100+ Letters Hit the SEC's Docket

The public comment period on the Securities and Exchange Commission's proposed Regulation Crypto Assets — the first purpose-built federal offering regime for crypto — closed on Tuesday, October 20, at 11:59:59 p.m. Eastern Time. When the window shut, more than 100 comment letters had been filed by crypto firms, Wall Street trade groups, law firms and advocacy organizations. The message from the docket was striking: support for the rule is broad, but nearly everyone wants changes — and even the proposal's backers say its headline feature, an investment-contract safe harbor, is written so narrowly that many projects could not use it.

For a market that has waited nearly a decade for a dedicated federal fundraising framework, this is a milestone. The final 48 hours of the docket were packed, with the Alternative Investment Management Association (AIMA), Bitwise Asset Management, the Hyperliquid Policy Center and Hivemind Capital Partners all filing on October 19, and the Aleo Network Foundation on October 18, according to Forkast's review of the SEC's indexed comment listing. Earlier entries came from Chainalysis, the Global Legal Entity Identifier Foundation, former SEC enforcement attorney John Reed Stark's consulting firm with Duke's Lee Reiners, and a Davis Polk & Wardwell letter filed October 15, alongside SkyBridge Capital founder Anthony Scaramucci's October 8 submission.

What happens next matters for anyone who buys tokens, holds crypto on exchanges, or trades tokenized stocks. The SEC must now work through the submissions before issuing a final rule — and the comments signal that the final version could look meaningfully different from the draft. Here is what the rule proposes, what the commenters demanded, and where the fight goes from here.

What Is the SEC's Regulation Crypto Assets Proposal?

Published on August 18 and filed as File No. S7-2026-27, Regulation Crypto Assets would create two exemptions from the registration requirements of Section 5 of the Securities Act of 1933 for what it calls "covered investment contracts" — investment contracts involving a crypto asset. It follows the Commission's March 2026 interpretation of how the federal securities laws apply to certain crypto assets and transactions. SEC Commissioner Hester M. Peirce, in her statement on the proposal, framed it as a capital-raising onramp and a regulatory offramp for digital assets, as summarized in Covington's detailed analysis of the draft.

The draft targets a market that has largely been forced offshore: since the 2017–2018 ICO boom collapsed under fraud cases and securities-law disputes, most serious token projects have excluded American investors entirely rather than risk an SEC enforcement action. The proposal would give them a lawful domestic path. The framework has two pillars:

The startup exemption. A one-time exemption permitting offerings of up to $5 million across a four-year period. An issuer would file a Form NOR notice on EDGAR before any sale — with no SEC review required, no financial statements, and free use of general solicitation — and end reliance with a Form TR transition report. There is no proposed US domicile, management, or asset test at this level.

The fundraising exemption. Modeled mainly on Regulation A and organized into two tiers. Tier 1 allows up to $20 million in a 12-month period, including up to $6 million sold by affiliated selling holders. Tier 2 allows up to $75 million in the same window, including up to $22.5 million from affiliated selling holders. Issuers must be qualifying US-organized entities — US management, more than 50 percent of assets in the US, business principally administered in the US — and file an offering statement on the proposed Form 1-CRYPTO that must be qualified by the SEC before sales begin. Tier 2 adds audited financial statements and continuing reports on new Forms 1-SC, 1-KC and 1-UC. A side-by-side breakdown of the $5M, $20M and $75M paths shows how the disclosure burden climbs at each step up the ladder.

Importantly, exemption is not deregulation. Issuers would still have to disclose how the business is structured, what the proceeds will fund, and which risks investors carry — and liability for false statements or fraud stays fully intact. The rule would also preempt state registration and qualification requirements for covered offerings, centralizing oversight at the federal level. If you want the full line-by-line breakdown of the original draft, our earlier piece on the SEC's Regulation Crypto Assets proposal explained covers the $75M fundraising rule in detail.

The Safe Harbor: The Draft's Most Controversial Feature

The second pillar is an investment-contract safe harbor. It would create a mechanism under which a crypto asset sold as part of a covered investment contract would no longer be deemed an investment contract within the definitions of "security" in the Securities Act and Exchange Act — once the issuer has finished its promised development work (or permanently abandoned it) and filed a public certification. In theory, this answers the industry's longest-running complaint: that tokens can never escape the shadow of an early securities offering, even after the network is fully decentralized.

In practice, the commenters say the mechanism is broken. The Hyperliquid Policy Center — which urged the SEC to adopt the rule — warned that the proposed safe harbor "requires a certification that many projects cannot make." The problem is not the concept but the drafting: the rule text stresses that development completion alone does not release every token, and the outcome still depends on the offering's structure, the promises made to investors, and whether the stated conditions are met. Many projects, particularly those with ongoing protocol upgrades or governance-token distributions, may never be able to certify cleanly.

That even supporters flag this is the draft's clearest signal that the final rule will change. As Lumida News noted in its analysis of the docket, the debate has moved from whether to regulate crypto capital formation to how — and the safe harbor certification is now the most likely area for revision before the rule is finalized.

What the 100+ Commenters Actually Asked For

The docket reads like a cross-section of the entire financial industry. Beyond the crypto-native firms, traditional finance weighed in heavily on the details — a sign of how far tokenization has moved into the mainstream.

Hyperliquid Policy Center: fix airdrops and the safe harbor. The center backed the proposal while pressing for two changes. First, it asked the SEC to codify that airdrops given away for nothing in return are not an investment of money and therefore not securities — a direct answer to years of enforcement ambiguity over free token distributions. Second, it pushed for a broader safe harbor, arguing the certification requirement as drafted excludes too many real projects.

AIMA: clearer disclosure of investor rights. The Alternative Investment Management Association, speaking for the asset-management industry, wants the rule to require issuers to distinguish between utility or economic exposure on one hand and genuine ownership, redemption, cash-flow and contractual rights on the other. The association also pressed for clearer disclosure of risks that could extend to fund managers, not just end investors.

SIFMA: resolve tokenized-stock questions now. The Securities Industry and Financial Markets Association, Wall Street's main trade group, focused less on token fundraising and more on the SEC's separate innovation exemption for onchain trading of tokenized stocks. In an October 19 letter, SIFMA said the agency must address investor protection and how issuers opt in from the start — before trading venues launch. As CoinMarketCap Academy's roundup of the letters put it, the rule would let issuers raise without full registration, but Wall Street wants the tokenized-securities questions settled first.

Nasdaq: keep tokenized stocks out. The exchange operator asked that tokenized stocks, bonds and ETFs stay outside the exemption entirely — drawing a firm line between crypto-asset fundraising and traditional securities that happen to trade onchain.

Other notable filers: Ava Labs general counsel Lee Schneider and Hedera Hashgraph filed during the comment window; Bitwise Asset Management and Hivemind Capital Partners filed in the final rush; Davis Polk & Wardwell submitted a detailed legal analysis on October 15; and SkyBridge Capital founder Anthony Scaramucci filed on October 8. The breadth of the coalition — from DeFi-native policy shops to the exchange that lists America's blue chips — shows this rulemaking is no longer a crypto-niche affair.

Tokenized Stocks: The Bigger Battle Behind the Letters

The most consequential fight in the docket may not be about crypto fundraising at all. It is about tokenized stocks — digital representations of equities trading on blockchain rails. The SEC put a five-year innovation exemption into effect in September that lets tokenized-securities venues and automated market-maker liquidity providers operate without being treated as exchanges or dealers. SIFMA's letter is a warning about what happens next: the design choices the agency makes now will shape market practice for a full five-year window, and rules on investor protection and issuer opt-in set during that window will be hard to unwind later.

The stakes are visible in the market already. BNY and Citadel Securities recently completed the first tokenized Treasury repo, and tokenized equities volumes have been climbing all year. If tokenized versions of stocks end up trading on venues that are legally not exchanges, the investor-protection framework has to be written before the trading starts — not after. That is why the Wall Street letters may ultimately matter more to ordinary investors than the crypto fundraising exemptions themselves.

This is also where the SEC's effort intersects with the rest of Washington's crypto agenda. The Commodity Futures Trading Commission, which approved the first US perpetual futures for Kalshi and Coinbase in August, faces a push from the Hyperliquid Policy Center to allow oil and compute perpetual contracts — extending crypto-style derivatives into the AI infrastructure trade. And the debate over what counts as a security versus a commodity continues on parallel tracks, as our coverage of whether XRP is a security or a commodity shows. Regulation Crypto Assets is one piece of a much larger federal crypto framework taking shape simultaneously.

What Happens Next — and What to Watch

The SEC now has to work through more than 100 submissions before issuing a final rule. Three areas look most likely to change:

• Airdrops. The Hyperliquid Policy Center's request to codify that free distributions are not securities has broad industry support and a clean legal logic. Watch for explicit airdrop language in the final rule.
• Safe-harbor certification. With even supporters calling the certification unworkable, expect the SEC to either simplify the certification standard or broaden the safe harbor's eligibility.
• Investor protection and issuer opt-in under the innovation exemption. SIFMA's October 19 letter makes this the top Wall Street priority. How the agency responds will shape tokenized-stock trading for the next five years.

Beyond the SEC, keep an eye on the CFTC's next moves on perpetual contracts and on the stablecoin front, where the GENIUS Act's stablecoin licensing rules are moving through their own implementation process. The federal crypto rulebook is being written in real time across multiple agencies — and each piece constrains the others.

No timeline has been announced for the final rule, but SEC rulemakings of this complexity typically take several months from the close of comments to a final vote. The comments themselves are public, and the SEC's indexed listing lets anyone track which letters the staff is reading. For a market used to regulation-by-enforcement, the shift to a public, comment-driven process is itself a landmark — even if the first draft needs work.

What This Means for Crypto Investors

For investors, the practical implications depend on the final rule's shape, but the direction is clear. A workable fundraising framework would let crypto projects serve US participants through a domestic, regulated path instead of geo-blocking Americans — potentially reviving a regulated version of the ICO market where investors can review a business plan and risk disclosures before committing funds. That is a meaningful upgrade from today's patchwork, where legitimate projects stay offshore and US investors are left with whatever trades on secondary markets.

The protections cut both ways. Mandatory disclosures, antifraud liability, audited financials at the higher tiers, and federal preemption of conflicting state rules would give investors more information and cleaner legal standing than the current landscape — where the question of whether a given token is a security often has no clear answer until an enforcement action arrives. If you are building or refreshing your portfolio strategy while the rules take shape, start with the fundamentals: our guides on how to buy Bitcoin in 2026 and the best crypto wallets for beginners cover the basics that no regulation will change.

The near-term watchlist is straightforward: the SEC's response to the airdrop and safe-harbor comments, any movement on the innovation exemption's investor-protection terms, and whether Nasdaq's plea to keep tokenized stocks out of the exemption survives. Each of those decisions will set the boundaries of what crypto markets look like for years.

FAQs

What is the SEC's Regulation Crypto Assets?

It is a proposed SEC rule (File No. S7-2026-27) that would create dedicated exemptions letting crypto projects raise capital without full securities registration. It includes a startup exemption of up to $5 million over four years, a two-tier fundraising exemption of up to $20 million or $75 million per year, and a safe harbor under which tokens could shed their investment-contract status after development is complete and a certification is filed.

What are the $5M, $20M and $75M exemption levels?

The $5M startup exemption is a one-time, lighter process with a Form NOR notice and no audited financials. The fundraising exemption has two tiers modeled on Regulation A: Tier 1 permits up to $20 million per 12-month period, and Tier 2 permits up to $75 million, with SEC qualification of a Form 1-CRYPTO offering statement, US-organization requirements, and audited financials plus ongoing reporting for Tier 2.

What is the safe harbor, and why is it controversial?

The safe harbor would let a crypto asset sold as part of an investment contract stop being treated as a security once the issuer completes or abandons its promised development work and files a public certification. Commenters — including the proposal's supporters — say the certification standard is drafted so narrowly that many legitimate projects could not meet it, making the safe harbor effectively unusable.

Are airdrops considered securities under the proposal?

The draft does not resolve the question, which is why the Hyperliquid Policy Center asked the SEC to codify that airdrops given away for nothing in return are not an investment of money and therefore not securities. Explicit airdrop language is one of the most likely additions to the final rule.

What is the SEC's innovation exemption for tokenized stocks?

A separate five-year exemption, in effect since September, that lets onchain trading venues for tokenized securities and automated market-maker liquidity providers operate without being treated as exchanges or dealers. SIFMA asked the SEC to resolve investor-protection and issuer opt-in questions before venues launch; Nasdaq asked that tokenized stocks, bonds and ETFs stay outside the crypto fundraising exemption.

When will the final rule take effect?

No timeline has been announced. The SEC must review the 100+ comment letters before voting on a final rule — a process that typically takes several months for complex rulemakings. Watch for changes on airdrops, the safe-harbor certification, and tokenized-stock investor protections.

Conclusion

The close of the comment period marks the moment crypto fundraising regulation stopped being a theoretical exercise. More than 100 letters — from DeFi policy shops to Wall Street's biggest trade group to the exchange that lists America's blue chips — agree that the SEC should finish this rule, and nearly all of them agree the draft needs surgery first. The safe harbor is too narrow, the airdrop question is unresolved, and the tokenized-stock framework needs investor protections before venues launch.

For investors, the trajectory is encouraging: the debate has moved from whether crypto capital formation gets a legal path to how that path is designed. The final rule will set the terms on which the next generation of crypto projects raises money from American investors — and, through the innovation exemption, how tokenized stocks trade for the next five years. The comments are in. Now the SEC has to write the ending.