The Securities and Exchange Commission (SEC) proposed Regulation Crypto Assets on August 18. Comments are due October 20.
Nothing is final. It is a proposing release, open for comment, and the rules may change before adoption.
Law360 published my argument about it on August 25, under the headline, "A Guiding Principle For The SEC On Exempt Capital Markets." What follows is the same doctrine with the parts I could not fit there.
The doctrine, in four sentences:
Presumptive Parity means that when the SEC creates or materially changes an exempt capital-raising pathway, it should compare that pathway with similarly situated existing pathways. Comparable opportunities and burdens should be the starting assumption unless meaningful differences justify different treatment. The burden of identifying a meaningful difference falls on whoever defends the disparity, and novelty alone is not such a difference. Where no justification exists, the Commission should move toward parity to the extent its legal authority permits.
Or, shorter: comparable opportunities, comparable burdens, and where treatment differs, a reason why.
That is the whole idea. The Law360 piece makes the case to a room full of securities lawyers. This one is for our community -- the people who actually build and run these offerings.
What the Commission is proposing
Three new pathways are proposed for what the release calls covered investment contracts:
- A startup exemption -- $5 million over four years. No financial statements. Disclosure posted on the issuer's own website rather than filed on EDGAR. No investment limits. Securities not restricted. One-time use.
- A fundraising exemption, Tier 1 -- $20 million in 12 months, with financial statements that need not be audited or even reviewed.
- A fundraising exemption, Tier 2 -- $75 million in 12 months, audited, with ongoing reporting.
Both fundraising tiers carry investment limits for non-accredited investors and ongoing reporting. Bad actor disqualification applies throughout. The proposal deserves credit for those.
Neither exemption requires a registered intermediary.
Now put that next to Reg CF
Reg CF caps an issuer at $5 million in a rolling 12 months. Every transaction runs through an SEC-registered funding portal or broker-dealer that is also a FINRA member. Form C on EDGAR. Financial statements certified, reviewed or audited depending on the size of the raise. Investment limits for non-accredited investors. A one-year holding period. Annual reports after that.
Tier 1 would allow four times the money with none of the assurance.
The lighter conditions come with the larger number. That is the sentence I keep coming back to.
Three things in the release that should have your attention
One. The Commission is not forecasting new issuers. It is forecasting existing issuers moving.
The economic analysis estimates 130 offerings a year under the new regime. Where does that number come from? Ninety-nine of them are derived from crypto-related offerings that happened in the Reg D and Reg CF markets under $5 million in 2024. The other 31 come from Reg D, Reg A and Reg CF offerings between $5 million and $75 million.
Every projected offering is drawn from the exempt markets that already exist. That is a substitution estimate. The Commission is modeling relocation.
Two. The intermediary is priced as a cost to be avoided.
Explaining why an issuer might prefer the startup exemption, the release notes that a $5 million Reg CF raise requires financial statements and an intermediary "which usually charges a fee," and puts the average intermediary fee at approximately 6.6 percent and the median at six percent.
I have an interest here and I will name it: I co-founded a funding portal. But read that passage again as a policy matter rather than a business one. The intermediary is not a toll booth. Congress wrote it into Title III because it does things -- confirming investors stay within their limits, running bad actor checks on the issuer, delivering educational materials, standing between the issuer and the investor as a regulated party. The release prices the function without ever explaining why the function is unnecessary.
Three. There is an open door in a footnote.
Defending the proposal to let startup exemption issuers post disclosure on their own websites instead of filing on EDGAR, the Commission volunteers that it "may assess whether a similar approach could be extended to other exemptions."
Nobody asked it to say that. It is an unsolicited signal that off-EDGAR disclosure delivery is being treated as a template with application beyond crypto. If you have ever watched a first-time issuer try to file a Form C, you know what that could be worth.
Where the Commission did compare, and where it stopped
Here is where Presumptive Parity can be valuable -- because it gives one a way to organize what follows.
The Commission did look sideways. The offering circular's discussion of financial condition is modeled on the analogous Reg CF provision. The integration mechanics draw on approaches already used across Reg CF, Reg A and Reg D. The disqualification provision cross-references Reg A's. The fundraising exemption is modeled on Regulation A throughout, tier structure and all.
That is careful work.
Then look at the offering limit. The intermediary requirement. The assurance standard. The resale restriction. On those, the comparison does not appear -- and the release does not explain why comparison shows up in some places and not others.
That is the gap. Not that the Commission ignored the neighboring exemptions, but that it read across them selectively and never said why.
Why Reg CF and Reg A, and not just any exemption
Someone will ask why these two exemptions should get this consideration at all. Part of the answer is where they came from.
Congress did not inherit the crowdfunding exemption from an agency rulemaking. Congress created it, affirmatively, in Section 4(a)(6) of the Securities Act through Title III of the JOBS Act in 2012, and directed the Commission to implement it -- including the intermediary, disclosure and investor-limit architecture that defines regulated investment crowdfunding today. In Title IV, Congress reached in again and directed the Commission to expand Regulation A.
Both of the pathways this proposal leans on hardest are pathways Congress affirmatively built. The Commission modeled the fundraising exemption on Regulation A, tier structure and all, and borrowed the financial condition discussion from Reg CF. It did not go looking for a model in the abstract. It went looking in the frameworks Congress created.
That sequence carries an implication. Congress makes the underlying statutory policy. The Commission implements it under delegated authority. So when the Commission uses that authority to innovate, it ought to be attentive to whether the innovation undermines, sidelines or strands a pathway Congress went out of its way to establish.
Chairman Atkins made a version of this point himself. In his statement accompanying the proposal, he called legislation indispensable to durable rules and reaffirmed the Commission's support for congressional market structure work. I agree with him. I would only ask that the same deference run backward as well, toward the pathways Congress has already built.
Regulatory innovation should not strand congressional policy.
To be clear about scope: this principle is addressed to the Commission, not to Congress. Congress legislates as it chooses, and it can create overlapping or inconsistent pathways if it judges that appropriate. The Commission acts under authority Congress delegated to it, and that is where the discipline belongs.
The irony
Predictability is the Commission's own stated reason for doing this.
The release says existing rules are a poor fit for crypto assets, that they complicate transaction planning, impede capital formation, and push issuers offshore. Chairman Atkins has framed the proposal as durable clarity under existing law. Those are predictability arguments, and they are reasonable ones. I am not going to pretend otherwise.
But predictability delivered to one part of an interconnected framework, without accounting for the rest, buys certainty for the new pathway at the cost of certainty everywhere else.
Clarity for one row is not coherence across the chart.
What I am not arguing
Presumptive Parity is not a claim that Reg CF deserves special protection, and it is not an argument against crypto.
Nobody is entitled to protection from competition. If a better product wins, it wins. But there is a difference between competitive disruption and regulatory displacement. The first is a better model winning. The second is the government creating a substantially more advantageous pathway for comparable activity, so an existing pathway loses ground to regulatory design rather than to the market.
Around Reg CF, funding portals, broker-dealers, service providers, issuers and investors have committed capital and built expertise for more than a decade. That investment is what turns an exemption on paper into a working market. Markets cannot promise those investments will never be stranded, and government should not either. But people who commit capital to a regulated ecosystem should be able to expect that government will not strand it through a disparity it cannot explain.
And it runs both ways
If a registered intermediary, investment limits, resale restrictions and ongoing reporting are appropriate when non-accredited investors participate through Reg CF, then someone should ask whether comparable safeguards are appropriate when similarly situated investors participate through a new pathway.
I do not presume to know the answer to either question. I am asking that the comparison happen deliberately, and that the answer appear on the record, instead of emerging later as a byproduct nobody chose.
The comment file is the place to say so
The Commission asked good questions in this release. It asked whether Reg CF's disqualification provision would be a better model than Reg A's. It asked whether the startup exemption should carry investment limits. It asked whether it should be limited to entities, and whether a U.S. nexus test should apply.
Those are the right questions. They should be asked about every attribute, not some of them.
CfPA's SEC Liaison and Affairs Subcommittee is preparing a comment letter. If you operate a portal, advise issuers, build the technology, or invest through these offerings, your experience is evidence the Commission does not otherwise have. You can join CfPA and lend your voice to our efforts.
Comments are due October 20, 2026. The CfPA Regulated Investment Crowdfunding Summit opens the same morning, so this topic will come up. It will be a better conversation if the comment file is full. https://bsy.is/q1VYY
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I am Vice-Chair of the Board of Directors of the Crowdfunding Professional Association, where I chair the SEC Liaison and Affairs Subcommittee and co-chair the Tax Innovation Subcommittee. I served as Co-Chair of the Board in 2025 and as President in 2024. I am also Chair and Co-Founder of BioTech Social Inc., parent of BioTech Funding Portal LLC, an SEC-registered funding portal and FINRA member, and a petitioner on SEC File No. 4-889, a pending petition to raise the Regulation Crowdfunding offering limit. These views are my own. CfPA has not considered, evaluated or adopted the principle described here.
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