SEC Chairman Paul Atkins: Cryptocurrency Regulation is a Historic Step
U.S. Securities and Exchange Commission Chairman Paul Atkins stated that the "cryptocurrency regulation" proposal is a key step for the Commission to solidify the U.S. as a global hub for crypto capital, aiming to provide a suitable issuance framework for investment contracts involving cryptocurrency assets.
The proposal, released on August 18, includes two exemptions from securities law registration: a startup exemption allowing a total fundraising of no more than $5 million over four years; and a fundraising exemption allowing up to $75 million every 12 months, which requires financial statements and ongoing reporting. Both require principle-based information disclosure, and anti-fraud provisions still apply. An investment contract safe harbor is also established: once issuers demonstrate they have ceased all key management efforts promised in the contract and meet other conditions, the non-security cryptocurrency asset will no longer be considered bound by the investment contract, thus falling outside the Commission's jurisdiction.
The proposal builds on a joint interpretation by the SEC and the Commodity Futures Trading Commission (CFTC) from March this year, which categorized digital commodities, collectibles, tools, stablecoins, and digital securities into five classifications and acknowledged that investment contracts can end. Atkins traced the rule lineage back to Commissioner Hester Peirce's 2020 safe harbor concept for tokens and stated that Congress still needs to pass market structure legislation to prevent future "unruly regulators" from overturning it. The Commission is also advancing a "crypto plan" and has signed a memorandum of cooperation with the CFTC.
The finalization may occur only after a public comment period. Atkins emphasized that innovation has flowed overseas due to insufficient regulatory willingness over the past decade, and now innovators are being invited back to the U.S. Industry groups claim this is the suitable regulation that has been lacking for years; however, congressional legislation remains stalled, leading the market to view administrative rules as a transitional bridge.
The exemptions have limits on amounts and disclosures, and the safe harbor depends on whether "key management efforts have ceased"; boundaries are still subject to debate during the comment period. Most tokens are interpreted as non-securities, but sales that constitute investment contracts may still fall under securities law.
In market mechanisms, buyers are project parties that need to comply with U.S. regulations for fundraising, while sellers are regulatory agencies exchanging exemption limits and disclosures for legal pathways. The driving force is that administrative rules are being implemented before congressional legislation, representing event-driven regulatory supply. Funds may flow back to the U.S. exemption pathway from offshore issuances. Beneficiaries include issuers capable of making principle-based disclosures and domestic trading platforms, while those under pressure include large issuers reliant on the "everything is a security, one lawsuit suffices" enforcement model, as well as those needing to register after exhausting their limits.
Source: Public Information
ABAB AI Insight
Paul Atkins shifts the enforcement priority from Gary Gensler's era to exemptions, utilizing two fundraising tiers and a "contract can end" safe harbor. The $5 million and $75 million figures are not arbitrary; they adapt the logic of small offerings under Reg A to tokens. The safe harbor is the structural component: once a team ceases its promised key management, the token disconnects from the investment contract, limiting the SEC's authority. Peirce's 2020 safe harbor finally transitions from speech to proposal text. He repeatedly states that only Congress can "prevent future regulators from undermining the framework," acknowledging the political half-life of the Commission's rules.
The capital pathway allows U.S. issuers to avoid first setting up structures in Singapore or Dubai. The startup exemption covers seed round levels, while the fundraising exemption covers growth rounds, with ongoing reporting internalizing the cost of information disclosure. The motivation is to fulfill the political task of making "the U.S. the capital of crypto"; the strategy is to use administrative interpretations and exemptions to lock in established facts before legislation, then wait for bills like CLARITY to be enacted. The CFTC's joint interpretation writes the boundary between commodities and securities into a memorandum usable by both agencies.
Analogous examples include the 1933 Securities Act's registration exemption ladder for stocks, the JOBS Act's opening for crowdfunding, and the EU's MiCA replacing country-specific enforcement with a single license. The U.S. still leaves "whether it is a security" within the Howey analysis, merely providing a provable endpoint for contracts. This phase transitions from litigation-based regulation to rule-based regulation, not yet reaching legislative lock-in.
This represents a regulatory change. The mechanism of change is: first, narrowing the securities circle using classification, then opening legal doors for transactions within the circle using exemptions, and finally allowing the door to close with the safe harbor. The enforcement model sells uncertainty premiums, while the rules model sells limits and disclosures. When limits become calculable costs, lawyers shift from "can we issue" to "which tier to follow, when to stop management." If Congress does not legislate in the long term, the next chairman may still withdraw the exemptions, thus this capital return carries political options.
ABAB News · Cognitive Law
- Enforcement sells uncertainty; exemptions sell limits.
- Investment contracts can end, thus regulatory authority has boundaries.
- Administrative rules are a bridge; congressional legislation is the shore.