Return of the ICO? SEC Wants Token Fundraising to Escape Securities Status

The US Securities and Exchange Commission (SEC) proposed a new regulatory framework that would let crypto projects raise money without full securities registration, marking what some in the industry are already calling a return of the ICO, the token-sale model that all but disappeared after 2017.

Commissioner Hester Peirce, whose 2020 safe harbor proposal helped shape the rule, said the plan gives entrepreneurs a path past what she called an ill-fitting set of rules applied to the industry for years.

What the Exemptions Cover

Regulation Crypto Assets creates two paths around full registration. Smaller projects qualify for a startup exemption, capped at $5 million raised over four years, with no accredited-investor requirement or cap on individual buy-ins.

Larger raises fall under a fundraising exemption up to $75 million per year, though issuers must file audited financials and keep up with ongoing reporting once they cross into that tier. Both remain subject to the SEC’s standard antifraud and antimanipulation rules.

The proposal builds on a March interpretation issued jointly by the SEC and the Commodity Futures Trading Commission (CFTC), which spelled out when a token can stop being tied to an investment contract, the legal structure regulators use to classify a token as a security.

The Return of the ICO

Initial Coin Offerings (ICOs), the token-sale boom of 2017, collapsed once the SEC began treating most of them as unregistered securities offerings and suing accordingly. With no legal onshore route left, teams spent years engineering workarounds instead, routing sales through offshore foundations, restricting buyers to non-US residents, running accredited-investor-only rounds under Regulation D, or dressing up token distributions as airdrops and points programs.

The SEC just proposed new crypto regulation. Since the ICO boom of 2017, token-based fundraising in the US has lacked regulations. "Reg Crypto" would change that. Grayscale Research believes this could bring more token offerings onchain, driving value to networks like @ethereum… pic.twitter.com/z4fMLwk1kn

— Grayscale (@Grayscale) August 19, 2026

Regulation Crypto Assets is the first rule that gives those teams a legal path to sell tokens onshore again. The $5 million startup lane in particular strips away the accredited-investor gatekeeping that has defined US crypto fundraising for eight years, a structural echo of what 2017-era ICOs tried to do before regulators shut the door.

What’s Different This Time

Unlike the disclosure-free chaos of 2017, issuers under either exemption still owe investors principles-based disclosures, and the larger tier requires audited financials most ICO-era projects never provided.

Welcome move by the SEC: ICOs are back – but this time, legitimate.Serious builders finally have a legal path to raise through tokens and build in America instead of fleeing offshore.Crypto never needed regulation by ambush. It needed clear rules builders could actually…

— Cooper (@CooperAIWorks) August 19, 2026

The rule would also preempt state securities registration for qualifying offerings, and it stops well short of the separate tokenized-securities framework some in the industry want, which was not part of Tuesday’s proposal.

The timing adds pressure of its own. Lawmakers left for summer recess without voting on the stalled CLARITY Act, legislation that would divide crypto oversight between the SEC and the CFTC, leaving the agency to move on its own through rulemaking instead.

Peirce called the proposal one step on a longer road and invited feedback during the 60-day comment period, particularly on how tokens might function more like equity so holders can share in a network’s growth. Whether an ICO-style wave actually follows will also depend on altcoins poised to benefit most from the new rules.