SEC Chair Paul Atkins floats safe-harbor plan for crypto startups and token offerings

SEC Chair Paul Atkins is signaling a major recalibration in U.S. crypto oversight, outlining a proposed safe-harbor framework designed to reduce regulatory friction for early-stage crypto projects and certain token activity. In the guidance, Atkins said "most crypto assets" should not be treated as securities. The SEC also set out how it is drawing the line between crypto assets and securities offerings, detailing the features that can make an asset an "investment contract" under federal securities laws. Atkins' proposal centers on three elements: a "startup exemption," a "fundraising exemption," and an "investment contract safe harbor." "It's time to stop diagnosing the problem and start delivering the solution," he said, arguing that a safe harbor could help innovators raise capital in the U.S. while maintaining appropriate investor protections. Under the startup exemption, crypto companies would be able to raise capital or operate for a limited period with additional regulatory latitude as they scale. The fundraising exemption would allow certain crypto investment contracts to raise a specified amount each year without registering under securities laws. The "investment contract safe harbor" is intended to give issuers and purchasers clearer expectations on when securities rules apply. The guidance also states that activities such as protocol mining (including Bitcoin mining), staking, and crypto airdrops do not constitute securities. Atkins described the approach as long-awaited clarity, emphasizing that investment contracts can ultimately terminate and that clearer standards could improve the path for entrepreneurs and investors as lawmakers pursue updated crypto legislation. The move follows recent coordination between the SEC and the Commodity Futures Trading Commission (CFTC). The CFTC said it would apply the Commodity Exchange Act consistent with the SEC's interpretation, calling the alignment "a major step" to provide greater clarity on how crypto assets are treated and to complement Congressional efforts to codify a comprehensive market structure framework. The developments mark another significant step in U.S. crypto regulation, with the SEC positioning the proposed framework as a way to support innovation while preserving investor protections.