The SEC's proposed Regulation Crypto Assets is not one blanket crypto exemption. It is a proposed decision system for certain investment contracts involving crypto assets: a one-time startup route capped at $5 million over as long as four years, a two-tier fundraising route capped at $20 million or $75 million in each 12-month period, and a separate safe harbor for the point at which a covered investment contract is deemed to have ceased to exist.
Map four things separately: what is offered, the amount and clock, the disclosure and reporting duties, and whether the issuer later satisfies both safe-harbor conditions. A crypto asset does not become outside the investment-contract definition merely because an offering used one of the proposed exemptions.
The question this map answers
If the SEC adopts Release 33-11434, which proposed path would an issuer use for a covered investment-contract offering, what would that path require, and what additional event would support a transition out of investment-contract status?
MyMap observed the SEC rule page, fact sheet, and Federal Register text at 4:06 AM Pacific Time on August 24. The SEC issued the proposal on August 18, the Federal Register published it on August 21, and comments are due October 20. These sources establish a proposal, not an operative exemption, an effective date, or a conclusion about any existing token.
Start with the transaction, not the token label
The proposal is framed around a covered investment contract: an investment contract involving a crypto asset. That distinction matters because the SEC's release says a crypto asset that is not itself a security can still be offered or sold subject to an investment contract. The map therefore does not begin with a box labeled “crypto = security” or “crypto = not a security.” It begins with the offer, the issuer's representations or promises, and the federal registration question.
If section 5 registration applies, the issuer would need registration or a valid exemption. The proposal would add two tailored exemption families. Both would preserve federal antifraud and antimanipulation provisions. An exemption from registration is not an exemption from those protections, and neither branch is the safe harbor described later in proposed Rule 400.
The startup route uses one long clock
The proposed startup exemption would permit up to $5 million during a period of up to four years. The SEC describes it as one-time and non-exclusive. Its purpose is to give an issuer a temporary runway to carry out the essential managerial efforts it represented or promised while distributing the associated crypto asset under tailored conditions.
The fact sheet says the issuer would make public filings at the beginning and end of the period and make principles-based narrative disclosures available to investors during it. The full release describes an initial notice of reliance, public website disclosure, amendments for material changes, and a transition report on Form TR at the end or on an earlier transition. Affiliates cannot multiply the cap by each claiming a separate startup period.
This branch should be drawn as a finite lane, not a recurring $5 million allowance. “Up to four years” is the outside duration of the proposed route; it is not a forecast that a network will reach a particular technical or legal state by then.
The fundraising route splits into two tiers
The proposed fundraising exemption is modeled in part on Regulation A and uses a rolling 12-month measurement:
| Proposed route | Maximum offering amount | Financial-statement boundary | Ongoing reporting |
|---|---|---|---|
| startup exemption | $5 million over one period of up to four years | principles-based narrative disclosure; the proposal does not make this a fundraising-tier financial statement lane | public disclosure and material-change amendments during the temporary period |
| fundraising Tier 1 | $20 million in 12 months | financial statements, but no audit assurance requirement stated for Tier 1 | required |
| fundraising Tier 2 | $75 million in 12 months | audited financial statements | required |
For both fundraising tiers, the SEC fact sheet describes public offering materials containing the shared principles-based narrative disclosures, a discussion of financial condition, and financial statements. The proposal would use Form 1-CRYPTO and would require an offering statement to be qualified before sales. It also proposes annual, semiannual, and current reports tailored from Regulation A forms.
The map keeps Tier 1 and Tier 2 separate because the higher cap changes the assurance boundary. It also keeps both apart from the startup lane: a 12-month recurring offering limit and ongoing filed reporting are not the same state as a one-time four-year development runway.
Form TR is a transition record, not a magic switch
Proposed Rule 400 would provide a conditional safe harbor from the term investment contract in the statutory definitions of security. The fact sheet and rule identify two required elements:
- The issuer has completed or permanently ceased all essential managerial efforts it represented or promised, and is not making and does not intend to make new representations or promises to perform such efforts for the crypto asset.
- The issuer files Form TR, certifies that the condition is satisfied, and supplies an analysis supporting that certification.
If those conditions are satisfied, the proposal says the covered investment contract would be deemed to have ceased to exist and the crypto asset would be deemed not to constitute, represent, or be subject to that investment contract for the cited Securities Act and Exchange Act definitions. The safe harbor addresses investment contract; the release expressly asks whether Rule 400 should address other terms in the definition of security. The map must not silently widen it to every possible legal classification.
Form TR also appears in the startup and fundraising transition provisions. That shared form does not make every transition identical. A fundraising issuer may use it for specified reporting suspension or termination paths, while Rule 400 requires the managerial-efforts condition plus a supporting analysis to perfect safe-harbor reliance.
State-law preemption is conditional and narrower than “federal only”
The proposal would define qualified purchaser so state securities registration and qualification requirements are preempted for offers and sales made under Regulation Crypto Assets. It would also cover certain secondary transactions by a person other than the issuer, underwriter, or dealer, including where the covered investment contract was initially sold under another federal exemption.
For the mapped secondary-market branch, the issuer must remain current with the relevant Regulation Crypto Assets information, filing, or periodic reporting requirements. The proposal does not say every state law disappears. The claimed effect concerns state registration and qualification requirements under the specified Securities Act mechanism; antifraud rules and other bodies of law require separate analysis.
Confirmed, derived, and still unknown
The controlling sources confirm the proposal's status, three dollar limits, measurement periods, shared narrative disclosure concept, Tier 2 audit boundary, fundraising reporting, conditional Rule 400 safe harbor, Form TR analysis, proposed qualified-purchaser definition, and October 20 comment deadline.
MyMap derives the four-stage decision order: classify the transaction, select an offering route, attach that route's information duties, and test a later transition separately. The visual's solid arrows connect conditions stated in the proposal; its stop bars mark category errors such as treating an offering exemption as proof that an investment contract ended.
The sources leave unknown whether the SEC will adopt the proposal, what a final rule would change, its effective date, which issuers would qualify, whether any particular transaction is a covered investment contract, whether an issuer has completed or ceased its promised managerial efforts, and how a court would assess facts outside the proposed safe harbor.
Reproducible mapping method
For a real offering analysis, create one record each for the transaction, issuer and affiliates, offered interest, crypto asset, representations or promises, offering amounts and dates, investor disclosures, filed forms, reporting state, and any transition claim. Then apply this order:
- Record the procedural version of the rule; do not mix proposed and final text.
- Determine whether the transaction is being analyzed as a covered investment contract.
- Aggregate offering amounts across the correct period and affiliated issuers.
- Select startup, Tier 1, or Tier 2 before assigning forms and assurance requirements.
- Track disclosures and reports as dated evidence, not as a single compliance checkbox.
- Evaluate Rule 400 only from the represented managerial efforts and the filed Form TR analysis.
- Map state-law preemption as its own conditional edge.
Teams can adapt these lanes in a MyMap flowchart. The editable diagram is a working model; the adopted rule, applicable statutes, filings, and transaction facts would remain the evidence.
Practical next step and limitations
For now, label every implementation box proposed. Commenters can use the map to identify the exact branch their evidence addresses: offering cap, disclosure burden, audit boundary, transition test, or secondary-market preemption. Do not write a comment about “the crypto exemption” without naming the subpart and condition at issue.
This article is a source-reading aid, not legal, tax, compliance, or investment advice. Update the map if the SEC modifies the docket, extends the comment period, adopts a final rule, or publishes new transition guidance.