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The U.S. Securities and Exchange Commission (SEC) is preparing to unveil its first comprehensive cryptocurrency rulemaking proposal under Chairman Paul Atkins. If released later this month as expected, it would mark one of the most significant regulatory shifts in the history of the U.S. digital asset industry and a clear departure from the agency's previous enforcement-first approach.
The proposal, known as "Regulation Crypto," is designed to establish a clearer legal framework for launching crypto projects, raising capital, and determining when a token should no longer be treated as a security. Before publication, however, the proposal must complete its review by the White House's Office of Information and Regulatory Affairs (OIRA), the final step before entering the public comment process.
Four-Year Safe Harbor Could Transform Crypto Startups
Paul Atkins first outlined the proposal during the DC Blockchain Summit in March, arguing that the United States needs a regulatory framework specifically tailored to blockchain innovation rather than forcing digital assets into decades-old securities laws.
One of the proposal's key features is a four-year safe harbor that would allow early-stage crypto startups to develop decentralized networks without immediately registering their tokens as securities.
During that period, qualifying projects would be permitted to raise up to $5 million per year while building their networks.
The proposal also introduces a separate fundraising exemption allowing crypto issuers to raise as much as $75 million through investment contracts tied to certain digital assets.
Another major element is the Investment Contract Safe Harbor, under which a token could cease being treated as a security once developers complete the essential managerial efforts needed to launch the network. After reaching sufficient decentralization, the token itself would no longer automatically fall under U.S. securities laws.
Atkins Wants Rules That Future SEC Leadership Cannot Easily Reverse
According to Atkins, guidance documents and staff interpretations are not enough because future SEC leadership can reverse them with relative ease.
His objective is to convert crypto policy into formal regulations that would require a full notice-and-comment rulemaking process to amend or repeal. Once published in the Federal Register and finalized, the rules would become far more durable than internal agency guidance.
The timing is particularly important. Commissioner Hester Peirce, who leads the SEC's Crypto Task Force and authored the original Token Safe Harbor proposal in 2020, has been one of the driving forces behind the initiative. Her proposal now serves as the intellectual foundation for much of Regulation Crypto.
Congress Still Holds the Final Piece
While the SEC can establish regulatory rules within its authority, Congress remains responsible for creating the long-term statutory framework governing digital assets.
That framework is expected to come through the CLARITY Act, legislation that would clearly divide oversight responsibilities between the SEC and the Commodity Futures Trading Commission (CFTC). The bill has already advanced through the House of Representatives and later received approval from the Senate Banking Committee by a 15-9 vote. Lawmakers are aiming to complete the legislative process before the August congressional recess.
Not everyone supports the proposed exemptions. Citadel Securities has argued that crypto regulations should follow the traditional notice-and-comment process with full disclosure requirements, warning that broad exemptions could weaken investor protection and reduce regulatory oversight.
On the other hand, major crypto industry organizations contend that the SEC has historically relied on exemptions in other areas of financial regulation and that faster implementation would eliminate years of legal uncertainty that has slowed blockchain innovation in the United States. Meanwhile, the SEC is also developing separate rulemaking initiatives covering crypto exchanges, broker-dealers, tokenized securities, custody requirements, and enhanced coordination with the CFTC.
If Regulation Crypto is officially released in July, it will represent the first formal crypto rulemaking initiative under Paul Atkins and could fundamentally reshape how crypto startups launch, raise capital, and operate in the United States for years to come.
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