The Securities and Exchange Commission unveiled a proposal on Aug. 18, 2026 that could make public token sales easier in the United States by creating two exemptions for crypto asset investment contracts: a $5 million one-time startup exemption and a $75 million rolling 12-month exemption with disclosure requirements.
But legal experts and academics say the rules are unlikely to trigger a return to the 2017 ICO era, when token offerings flooded the market before regulators tightened enforcement.
“My initial view is that the $75 million exemption could make public token offerings more feasible, but it is unlikely to produce a return to the ICO boom,” said Lee Reiners, a lecturing fellow at Duke University who specializes in financial regulation.
The proposal allows issuers to conduct what Drew Hinkes, a partner at Winston & Strawn, calls “serial raises” of $75 million every 12 months, “provided they are actually distinct offerings.” Lilya Tessler, a partner and leader of Sidley’s Global FinTech and Blockchain group, added that “nothing prevents an issuer from relying on the exemption more than once.”
Subsequent raises beyond the first require filing new offering statements and SEC staff review, plus annual and semiannual reporting. Non-accredited investors face a 10% cap on purchases regardless of which round they participate in, based on the greater of their income or net worth.
The SEC estimates approximately 130 offerings will use the two exemptions annually and 475 issuers will use the broader investment contract safe harbor created by the proposal.
Why the Caution on ICO Revival
Historical data supports skepticism about a boom. Up to 90% of ICO-funded projects between 2017 and 2019 failed. Reiners noted that projects could satisfy formal exemption conditions while continuing to market assets whose value depends on issuer managerial efforts, leaving retail investors exposed to the same risks as prior cycles.
He also suggested that scarcity itself could attract early investors. “If investors expect a successful issuer to conduct later offerings at a higher valuation, an initial allocation may become more attractive precisely because it is limited,” Reiners said.
Secondary Market Risk
Hinkes flagged a structural concern: tokens may remain subject to investment contract classification in secondary market trading if issuer representations or promises create reasonable profit expectations tied to managerial efforts. “If a transaction of a non-security covered crypto asset causes the transfer of the investment contract from cryptoasset seller to cryptoasset buyer, there is a risk that the sale of the crypto asset would be viewed as a securities transaction,” he said.
Crypto lawyer Jake Chervinsky called the proposal overdue, saying it arrived “not one day too soon.”
The SEC did not specify whether the proposal remains in comment period or has been formally adopted, nor did it provide a timeline for implementation if approved.
