SEC Unveils Reg Crypto Framework to Clarify Digital Asset Rules
The US Securities and Exchange Commission (SEC) is pushing ahead with new crypto regulations under the Reg Crypto framework. The latest guidance aims to clarify how digital assets can be issued, traded, and eventually decentralised without falling foul of securities laws. A dedicated task force within the SEC is leading the effort, focusing on compliance pathways for blockchain-based fundraising.
The SEC’s Crypto Task Force, made up of around 15 specialists, applies the Howey Test to assess whether digital tokens qualify as securities. Their work includes issuing statements to define the legal status of various assets. One key area of focus is when a token reaches sufficient decentralisation—specifically, when it no longer relies on central managerial efforts. At that point, it may no longer meet the criteria of a security.
Recent guidance also addresses crypto wallets that relay user decisions to the blockchain. The SEC clarified that such platforms could avoid broker-dealer registration if they function purely as tools for user-directed transactions. The rules emphasise that platforms should not profit from individual trades but instead act as neutral intermediaries. The Reg Crypto framework for fundraising draws inspiration from Hester Peirce’s Safe Harbor proposal. It offers crypto projects a structured route to raise funds while working toward decentralisation. Additionally, the SEC is exploring an innovation exemption. This would allow tokenised stocks to trade on automated market makers without requiring full exchange registration. The agency is also reviewing different token models. Some tokens replicate traditional stock rights, while others simply represent value without attached claims. The goal is to create clear distinctions between securities and non-securities in the digital asset space.
The SEC’s updated guidance provides clearer rules for crypto fundraising and decentralisation. Projects that follow the Reg Crypto framework may avoid regulatory hurdles if they meet specific conditions. Meanwhile, the innovation exemption and wallet clarifications aim to support compliant trading while maintaining investor protections.
