SEC Chair Paul Atkins says the commission is preparing new regulatory guidance for crypto fundraising and startup exemptions, potentially unlocking clearer capital formation pathways for digital asset founders.
The Securities and Exchange Commission is close to releasing what Chair Paul Atkins calls a "reg crypto" framework, a set of proposals designed to finally give blockchain startups and digital asset projects coherent rules around fundraising. Speaking at an industry event on Monday, Atkins indicated that the forthcoming guidance would address how crypto startups can legally raise capital and which exemption pathways might apply to token-based offerings. For founders who have spent years navigating ambiguous enforcement actions rather than actual rulebooks, this is a significant signal.
The core issue has always been classification. Since the SEC's 2017 DAO Report, the commission has operated under the premise that most tokens qualify as securities, subjecting them to the same registration and disclosure requirements as traditional stocks and bonds. That posture forced countless crypto projects into a legal gray zone. Some filed for Regulation D exemptions, limiting their raises to accredited investors. Others moved operations overseas entirely, jurisdictions like Singapore, Switzerland, and the UAE enthusiastically filled the void with tailored frameworks.
Atkins, who took the helm at the SEC earlier this year, has been vocal about shifting the agency's approach from enforcement-first to clarity-first. His predecessor, Gary Gensler, oversaw more than a hundred enforcement actions against crypto firms, a strategy that secured settlements but produced no usable regulatory framework for legitimate builders. The new chair's comments suggest that era is winding down, at least on the capital formation side.
The fundraising question is arguably the most practical regulatory challenge facing crypto startups today. Under current rules, a blockchain project issuing tokens to fund development must either register the offering as a security sale, an expensive and time-consuming process that most early-stage teams cannot afford, or rely on narrow exemptions like Reg D, Reg S, or Reg A+. Each comes with significant limitations on who can invest, how tokens can be traded, and what disclosures are required.
As CoinDesk reported from Atkins' remarks on Monday, the SEC's upcoming proposal will specifically target these exemption frameworks and explore whether new carve-outs are appropriate for digital assets. That could mean a tailored registration pathway for token projects, updated thresholds for what qualifies as a securities offering, or clearer safe harbors that give founders room to build without immediately triggering compliance obligations.
For investors, clearer rules could reopen participation in early-stage crypto deals that have effectively been off-limits to non-accredited individuals in the United States. It could also bring more onshore activity back to US markets. According to tracking by PitchBook, venture capital investment in crypto and blockchain startups dropped from roughly $26 billion in 2022 to under $10 billion in 2023, partly due to regulatory uncertainty. While 2024 has seen some recovery, deal flow remains depressed compared to the previous cycle.
Why Timing Matters Now
Atkins did not provide a specific release date for the proposals, but framing them as "close" suggests publication could come within weeks rather than months. The timing aligns with broader institutional movement in the digital asset space. Spot Bitcoin ETFs have been trading since January, spot Ether ETFs received approval over the summer, and Congress has made incremental progress on stablecoin legislation through the Clarity for Payment Stablecoins Act.
The industry should temper expectations cautiously. A proposal is not a final rule. Once published, it will enter a public comment period, likely lasting 60 to 90 days, during which industry participants, consumer advocates, and legal experts will submit feedback. The SEC will then review those comments, potentially revise the text, and vote on adoption. That process typically takes six to twelve months, sometimes longer if the rule faces political opposition or legal challenge.
Still, the direction matters more than the timeline right now. For the first time in nearly a decade, the SEC is actively working to build a regulatory structure for crypto fundraising rather than retroactively penalizing projects for operating without one. Founders should begin preparing compliance strategies that align with where these rules are heading, not where they have been. Investors should watch the proposal's specifics closely, particularly any provisions around token classification thresholds and secondary trading restrictions. The gap between ambiguity and clarity is where opportunity lives, and that gap is finally starting to narrow.
