SEC’s Proposed Regulation Crypto Assets: What It Means and Why It Matters

With congressional efforts to enact comprehensive crypto legislation—including the CLARITY Act—stalled for the time being, the SEC has made its own rule proposal based on Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets, Release No. 33-11412 (Mar. 23, 2026), input from its Crypto Task Force, the President’s Working Group on Digital Asset Markets (Executive Order 14178) and Chairman Atkins’ “Project Crypto” Initiative. If adopted, the new rules known as “Regulation Crypto Assets” would establish an offering regime for certain investment contracts involving crypto assets (defined as “covered investment contracts”), and provide issuers of covered investment contracts with certain pathways to raise capital under the federal securities laws.

The SEC explained that a non-security crypto asset becomes subject to an investment contract when an issuer offers it by inducing an investment of money in a common enterprise with representations or promises to undertake essential managerial efforts from which a purchaser would reasonably expect to derive profits. Under the proposed rules, a “covered investment contract” is an investment contract that must meet these three requirements: (i) a crypto asset is subject to the investment contract; (ii) such crypto asset is not a security; and (iii) no asset other than such crypto asset (including any security or non-security assets) is subject to the investment contract.In other words, Regulation Crypto Assets will not apply to tokenized equity offerings, multi-asset baskets or investment contracts involving "digital securities," among other things.