Oct. 21, 2026
From: Robert Rutkowski <[REDACTED]> Sent: Wednesday, October 21, 2026 11:31 AM To: Chairman <Chairman@SEC.GOV> Subject: Regulation Crypto Assets, File No. S7-2026-27; Release Nos. 33-11434 and 34-106150; RIN 3235-AN38 October 21, 2026 Vanessa A. Countryman Secretary U.S. Securities and Exchange Commission 100 F Street, NE Washington, DC 20549-1090 Re: Regulation Crypto Assets, File No. S7-2026-27; Release Nos. 33-11434 and 34-106150; RIN 3235-AN38 Dear Secretary Countryman and Members of the Commission: I respectfully submit these comments concerning the Commission's proposed Regulation Crypto Assets, published at 91 Federal Register 54510 on August 21, 2026. The proposal would establish a tailored offering regime for certain investment contracts involving crypto assets, including exemptions from securities registration requirements, a conditional investment-contract safe harbor, and a definition of qualified purchaser affecting state securities regulation. The Commission identifies legitimate regulatory objectives: facilitating capital formation, accommodating technological innovation, and providing investors with sufficient information to make informed decisions. The central question is whether the proposed framework achieves those objectives consistently with the federal securities laws, the Commission's statutory authority, and its responsibility to protect investors. The proposed framework raises substantial questions concerning disclosure quality, investor access, issuer accountability, regulatory jurisdiction, and the consequences of permitting certain crypto-related investment contracts to receive different treatment from other securities offerings. These questions merit explicit, evidence-based treatment in the Commission's consideration of the rule. I request that the Commission address the following matters in its public record and explain how its analysis supports the regulatory framework ultimately selected. I. Registration Exemptions and the Statutory Investor-Protection Framework The proposal establishes two principal registration exemptions. The startup exemption would permit qualifying offerings of up to $5 million during a four-year period. The fundraising exemption would permit qualifying offerings of up to $75 million during a 12-month period, subject to applicable conditions and disclosure requirements. Issuers relying on these exemptions would remain subject to federal antifraud and antimanipulation provisions.¹ The continued application of antifraud provisions is significant, but it does not resolve every concern associated with registration exemptions. Fraud prohibitions address unlawful conduct; registration and associated disclosure requirements also seek to provide investors with information before they commit their funds. These protections serve related but distinct purposes. Investors may be unable to identify material omissions before investing, particularly when an offering depends on information controlled by promoters, developers, affiliated entities, or other insiders. Enforcement after a loss cannot necessarily restore an investor's funds or compensate for the absence of information at the time of purchase. Accordingly, the Commission should explain how the proposed exemptions address the information asymmetry that exists between crypto-asset issuers and purchasers. That analysis should identify which registration protections are being modified, which remain applicable, and how the retained requirements compensate for protections that would no longer apply. The Commission should also explain why the proposed treatment is appropriate for the particular investment contracts covered by the rule rather than assuming that the use of blockchain technology, tokenization, or digital transfer mechanisms independently warrants different regulatory treatment. The relevant inquiry is not whether technological innovation deserves consideration. It is whether the specific regulatory distinctions proposed are justified by the characteristics of the covered offerings and supported by evidence demonstrating that investors will remain adequately protected. II. Disclosure Quality and Material Information The proposal relies substantially on principles-based narrative disclosures. Under the startup exemption, issuers would provide specified public filings and make required narrative disclosures available to investors. That framework differs from a regime requiring financial statements and more extensive financial information. Principles-based disclosure can offer flexibility, particularly where technological and organizational structures differ among issuers. However, flexibility also raises questions about consistency, completeness, and comparability. Investors evaluating different offerings need sufficient information to assess the nature of their investment, the issuer's financial condition, the allocation of proceeds, the interests of insiders, the principal sources of project risk, and the circumstances under which the project may fail. For crypto-asset investment contracts, material information may also concern token supply and distribution, insider holdings, vesting schedules, token-release arrangements, governance rights, conflicts of interest, technological dependencies, cybersecurity vulnerabilities, and the ability of developers or affiliated persons to change the underlying network or its operation. The Commission should identify the minimum disclosures necessary to address these matters and explain how investors can obtain comparable information across offerings. It should also distinguish information that can appropriately be tailored to an issuer's circumstances from information that should be required consistently because it is essential to evaluating the investment. For the fundraising exemption, the Commission should explain how its financial-statement and ongoing-reporting requirements interact with principles-based disclosures, including how material omissions and inconsistencies will be addressed. The economic analysis should evaluate the likely effects of different disclosure standards on investor decision-making, compliance costs, comparability, and the ability to identify misconduct before losses occur. A further question concerns whether disclosure obligations remain sufficient when insiders possess information about token distribution, development progress, or future supply that retail purchasers cannot independently verify. The Commission should explain how the proposed requirements address those informational advantages and whether additional safeguards are warranted for particular categories of offering. III. The Conditional Investment-Contract Safe Harbor The proposed investment-contract safe harbor raises a distinct question concerning the relationship between an issuer's conduct and the continuing application of federal securities law. Under the proposal, an issuer could certify that it had completed or permanently ceased the essential managerial efforts represented or promised to investors and that it was not making, or intending to make, new representations or promises concerning such efforts. The issuer would file a certification and supporting analysis. If the conditions were satisfied, the covered investment contract would be treated as having ceased to exist for purposes of the relevant statutory definitions.² The Commission identifies greater regulatory certainty as an objective of this mechanism. The important question is how that certainty will be established without creating avoidable uncertainty for purchasers who acquired their interests in reliance on an issuer's earlier representations. Completion of an issuer's stated managerial efforts does not necessarily establish that investors no longer depend on the issuer or affiliated persons. A project might continue to rely on concentrated control, proprietary infrastructure, development decisions, or managerial activities that materially affect its operation and economic prospects. The Commission should explain how the proposed criteria distinguish projects that have become meaningfully independent of essential managerial efforts from those that continue to depend on the work or control of identifiable participants. The analysis should address projects in which managerial efforts cease temporarily, development is abandoned, or an issuer's representations change after capital has been raised. It should also explain how an investor, state regulator, or other affected party may challenge an inaccurate certification; how the Commission will evaluate supporting submissions; and what consequences follow if an issuer's certification proves materially inaccurate. These questions are particularly important because a transition out of securities-law coverage may affect the information available to investors precisely when a project encounters difficulties or its future becomes less certain. The Commission should therefore explain the safeguards supporting the safe harbor and how they preserve appropriate accountability for representations made when the investment was offered. IV. State Securities Regulation and Federal Preemption The proposal would define qualified purchaser for purposes of the Securities Act in a manner that would preempt state securities registration and qualification requirements for covered offerings and specified secondary-market transactions.³ The interaction between federal and state securities regulation deserves particular attention because state regulatory authorities can provide an additional means of identifying problematic offerings and pursuing violations within their respective jurisdictions. The Commission should explain the statutory basis for the proposed definition of qualified purchaser, including how that definition relates to the purposes of the applicable preemption provisions and Congress's decision to distinguish qualified purchasers from other investors. The analysis should address the consequences of extending the relevant treatment to retail purchasers who may lack the financial sophistication or resources associated with investors traditionally regarded as capable of evaluating certain exempt offerings. The Commission should also distinguish preemption of state registration and qualification requirements from other forms of state enforcement authority. The scope of the proposed preemption and the protections that remain available should be explained precisely. A complete analysis should identify how state securities regulators will be able to respond to suspected fraudulent or abusive offerings, what information will be available to them, and how federal and state authorities will coordinate their efforts. These questions cannot be resolved merely by identifying administrative efficiencies associated with a uniform federal framework. The analysis must also address the practical consequences for the detection of misconduct and the protection of purchasers. V. Evidence of Investor Harm and the Economic Analysis The Commission should expressly consider available evidence concerning cryptocurrency-related fraud and financial losses. The FBI's 2025 Internet Crime Report, released in April 2026, recorded 181,565 complaints involving cryptocurrency and reported losses exceeding $11 billion. The FBI also reported that investment fraud accounted for nearly 49% of all reported losses from internet scams.⁴ These figures are relevant to an assessment of the broader risks associated with cryptocurrency-related investment activity. They should not, however, be treated as establishing that every reported loss involved a security or an offering covered by the proposed rule. The Commission should distinguish cryptocurrency-related complaints generally from losses attributable to offerings that would qualify for the proposed exemptions. It should identify available evidence concerning the prevalence, characteristics, and consequences of fraud in the categories of transactions covered by the proposal. The economic analysis should also examine whether reduced registration obligations would materially increase productive capital formation, improve investor access to reliable information, or principally reduce compliance costs for issuers. Other relevant considerations include the potential effects on retail participation, market integrity, the comparability of investment opportunities, and the ability of investors to obtain remedies when misconduct occurs. The Commission should explain the assumptions underlying its analysis, identify material uncertainties, and consider whether alternative approaches could achieve its stated objectives while preserving effective investor protections. VI. Statutory Authority and Administrative Accountability The Commission should explain the legal foundation for each principal component of the proposal. Section 28 of the Securities Act of 1933 authorizes exemptions from provisions of that Act to the extent an exemption is necessary or appropriate in the public interest and consistent with investor protection.⁵ The Commission should explain how that standard supports the proposed registration exemptions and the broader regulatory framework. The analysis should distinguish the authority to grant exemptions from the authority to establish a comprehensive alternative framework for a particular category of investment contract. It should identify the statutory basis for the startup exemption, the fundraising exemption, the investment-contract safe harbor, and the proposed definition of qualified purchaser. It should also explain how each component fits within the relevant statutory provisions and any applicable limitations. The Commission should address how its interpretation of its authority relates to the statutory structure of the Securities Act, including the relationship between registration requirements, authorized exemptions, and the treatment of investment contracts. The Supreme Court's decision in West Virginia v. EPA, 597 U.S. 697 (2022), also makes the scope of delegated authority relevant where an agency claims authority to make decisions of major economic and political significance. Whether that doctrine applies to a particular provision of this proposal requires appropriate legal analysis; it should not simply be assumed either to control or to be irrelevant. The Commission should explain the legal reasoning supporting its approach, identify material counterarguments, and demonstrate how the proposed framework remains within the authority Congress conferred. VII. Request for a Complete Public Explanation The proposed rule presents interconnected questions concerning registration, disclosure, issuer accountability, state regulatory authority, investor losses, and statutory interpretation. I respectfully request that the Commission address these matters expressly in its consideration of Regulation Crypto Assets. That analysis should identify the protections retained under the proposed exemptions, explain how the safe harbor would operate in practice, evaluate the consequences of the proposed preemption provisions, and establish the statutory basis for each major component. The Commission should also distinguish established evidence from assumptions and acknowledge material uncertainties in its assessment of investor protection and capital formation. A transparent explanation of these matters would permit investors, issuers, state regulators, and other interested parties to evaluate the proposal's legal foundation and practical consequences on a common evidentiary record. Respectfully submitted, Robert E. Rutkowski