Our comment letter on the SEC’s proposed Regulation Crypto Assets

As proposed, Regulation Crypto Assets limits its fundraising exemption to an entity organised under US law whose executive officers or directors are mostly US citizens or residents, which holds more than half of its assets in the United States, and whose business is administered principally there. Its startup exemption is open to any entity, individual or group, with no test of where the team is located. Our letter asks the Commission to open the first to non-US entities on conditions and to keep the second open to non-US teams, and makes three further asks. In all, five changes:

1. Admit non-US entities to the fundraising exemption on conditions that answer the Commission’s concerns, and keep the startup exemption open to non-US teams.
2. Coordinate the exemptions with Regulation S, so that a disclosed, flowback-guarded offshore tranche is neither counted toward the offering limits nor integrated.
3. Adapt the legality opinion to the Staff Legal Bulletin No. 19 model, with counsel for the jurisdiction of organisation and counsel for the governing law each opining on their own law.
4. Adopt the Rule 400 safe harbor with a no-admission provision, a clear certifier and a defined analysis, and confirm it for non-US issuers that sold only offshore.
5. Let an issuer answer Rule 103(b) with its MiCA white paper or VARA whitepaper and risk disclosure statement, plus a reconciliation table and a US supplement.

We wrote from the vantage point of non-US founders whose tokens reach US persons. In our experience, many Indian and UAE teams deal with US persons today by exclusion: they sell offshore under Regulation S, with geo-blocking and residence checks. We support the proposal’s core design: principles-based disclosure, a startup exemption that does not turn on where a team is located, and a safe harbor that codifies part of the separation analysis of the Commission’s March 2026 interpretation, Release No. 33-11412.

1. Admit non-US entities to the fundraising exemption on conditions, and keep the startup exemption open

Proposed Rule 300(b)(1) limits the fundraising exemption to an entity “organized under, and subject to, the laws of the United States” whose executive officers or directors are mostly US citizens or residents, with more than 50 percent of its assets in, and its business administered principally in, the United States. The stated reasons include financial statements, recourse for fraud, information asymmetries and reversing the move of projects overseas, and the considerations behind the 2015 decision not to extend Regulation A to non-Canadian foreign issuers are said to “apply with equal force”. RFCs 85 and 86 ask whether eligibility should be expanded, including to “other types of foreign issuers”. The startup exemption, by contrast, is open to “an entity, an individual, or a group of individuals or entities”, and RFCs 49 and 50 ask whether to require US formation or add the fundraising exemption’s US tests.

A Delaware subsidiary of an Indian or UAE group, with its engineers, managers and treasury in Bengaluru or Dubai, fails the officer and administration tests. The Proposing Release accepts that ineligible issuers may have to “alter their organizational structure in order to qualify”, but for these teams that means moving the management and the business to the United States.

The record suggests the test is broader than its purposes require, for three reasons. First, the business-contact tests come from the foreign private issuer definition, where they operate in the alternative and only when more than 50 percent of the voting securities are held of record by US residents; the proposal makes all three cumulative. Second, the criteria are said to be modelled “in large part” on Regulation A, yet Regulation A admits Canadian entities, requires only a principal place of business in the United States or Canada, has no officer or asset test, and addresses recourse through an irrevocable consent and power of attorney on Form F-X. The proposal has no Form F-X counterpart, and Form 1-CRYPTO omits as “not applicable” an agent-for-service exhibit that the Proposing Release itself lists. Third, the economic analysis neither estimates how many issuers the test would exclude nor analyses an alternative to it. And the financial statement rationale explains why the issuer should be an entity, not why it must be organised in the United States.

We recommend admitting non-US entities on conditions that each answer a stated concern:

• Recourse. The issuer files Form F-X with Form 1-CRYPTO and keeps its US agent for service current, as Rule 263 requires of non-US Regulation A issuers, and the agent-for-service exhibit is restored to Item 15.
• Enforceability. The offering circular gives the disclosure that Regulation S-K Item 101(g) requires of foreign private issuers in registered offerings: whether investors can serve process in the United States, enforce US judgments and bring original actions abroad against the issuer and its non-US officers and directors.
• Financial statements. US GAAP or IFRS as issued by the IASB, which the Commission accepts from Canadian Regulation A issuers, with Tier 2 audits as proposed.
• Reporting. Forms 1-KC, 1-SC and 1-UC apply as proposed.
• Disqualification. Rule 104 should add final orders of a foreign securities, financial services or virtual asset regulator where the issuer is organised or has its principal place of business, or where a person listed in Rule 262(a) resides, that would be disqualifying if entered by a comparable US authority.

Non-US entities could be admitted to Tier 1 first, with a staff review before Tier 2 opens. Where a team will not relocate, US investors are better off with access to its offering, with Rule 103 disclosure, reporting and US remedies, than with the limited options or added risks that the Proposing Release attributes to offshore activity. At a minimum, the Commission should match Regulation A by admitting Canadian issuers with a principal place of business in the United States or Canada, and apply the business-contact tests in the alternative. We also oppose a domicile test for the startup exemption, which already carries a $5 million cap, a four-year limit, one-time use, Rule 103 disclosure, certifications by every group member and bad-actor disqualification; a domicile test would close the only offering route the proposal leaves open to non-US teams, and we would instead require a non-US issuer to appoint a US agent, name it on Form NOR and Form TR, and consent to service. The drafting keeps Rule 300(b)(1) as proposed and adds one paragraph:

“(7) If the issuer is an entity that does not otherwise satisfy paragraph (b)(1) of this section, the issuer [meets each condition above], in which case it is deemed to satisfy paragraph (b)(1).”

2. Coordinate the exemptions with Regulation S

Rule 101(b) tells issuers to “see § 230.152” on integration, and “aggregate offering price” means all consideration “to be received for the covered investment contracts being offered”. RFCs 9, 14 and 16 ask about those definitions, any other general provisions, and Rule 101(b) and Rule 152. On a full-text search of the SEC-issued version, the Proposing Release does not mention Regulation S.

A non-US team offering in the United States would keep running an offshore Regulation S tranche of the same token. Rule 152(b)(2) provides that Regulation S offers and sales “will not be integrated with other offerings”, and the startup cap counts only covered transactions, which are offers and sales in reliance on that exemption. The fundraising exemption, however, does not say whether consideration from a concurrent offshore tranche counts toward the $20 million and $75 million limits. Regulation D answers that question in Rule 500(g): purchasers and proceeds under Regulation S are excluded. Websites also matter: the startup exemption requires website disclosure, and the Commission has said that one website soliciting US investors under Rule 506(c) and offshore investors under Regulation S “could raise concerns” about directed selling efforts.

We recommend three changes. The first is conditional, because the token is fungible and startup exemption contracts are not restricted securities, so an uncapped offshore tranche could flow back into the United States: add to Rule 100 a note modelled on Rule 500(g) that excludes a disclosed, flowback-guarded offshore tranche from the offering limits. Second, confirm that Rule 152(b)(2) covers a concurrent or sequential Regulation S offering of the same subject crypto asset, and that general solicitation in the US offering does not by itself preclude reliance on Regulation S offshore, as the Commission said of domestic exempt offerings in 2020. Third, give guidance that a single global disclosure website is not directed selling efforts if US visitors are routed only to the US tranche and the offshore tranche uses procedures reasonably designed to guard against sales to US persons. The note we proposed reads:

“Offers and sales of covered investment contracts made outside the United States in compliance with §§ 230.901 through 230.905 are not counted toward the offering limits in § 228.200(b)(4) or § 228.300(a) if (i) the issuer’s disclosure under § 228.103 describes the offshore offering, including its size and use of proceeds, and (ii) the offshore offering uses measures reasonably designed to prevent crypto assets sold in it from being resold to U.S. persons during the offering period.”

3. Adapt the legality opinion to the Staff Legal Bulletin No. 19 model

Item 15, exhibit 12 of Form 1-CRYPTO requires “An opinion of counsel as to the legality of the securities covered by the offering statement, indicating whether they will be binding obligations of the issuer.” The form omits the words “when sold” that the Proposing Release uses in describing the opinion. The exhibits that define holders’ rights include “any whitepaper or similar document published by the issuer”, and the subscription agreement exhibit includes any token purchase agreement or SAFT. RFC 112 asks whether “the required opinion(s)” need additional instructions or changes.

A covered investment contract is neither a share nor a debt instrument, and the form does not say what obligation counsel is confirming, under which law, or who may give the opinion. Token purchase agreements used by non-US teams may be governed by the team’s home law or English law, and under our first recommendation the issuer itself may be organised abroad. The whitepaper is also listed as an instrument defining holders’ rights, although whitepapers usually describe plans, not contractual undertakings.

Staff Legal Bulletin No. 19 answers these questions for registered offerings. For shares of a foreign corporate registrant, foreign counsel, or US counsel competent in the foreign law, opines “on the laws of the registrant’s jurisdiction of incorporation”. For debt securities, counsel “must opine on the law of the jurisdiction governing the agreement or instrument”, and where the registrant is organised outside primary counsel’s expertise, local counsel may give the opinion on existence, power and authorisation, with both opinions filed. We recommend an instruction to exhibit 12 along these lines:

“The opinion shall state whether the covered investment contracts, when sold, will be binding obligations of the issuer. The opinion shall address (i) under the law of the issuer’s jurisdiction of organization, whether the issuer is validly existing, has the power to enter into the instrument under which the covered investment contracts are sold, and has duly authorized its entry into that instrument; and (ii) under the law governing that instrument, whether it is enforceable against the issuer. Separate opinions may be given by counsel qualified in each such law and shall each be filed as exhibits. The opinion is not required to address whether any crypto asset is a security or whether the issuer will perform any representation or promise to engage in essential managerial efforts.”

Without that last sentence, the exhibit may be read as a classification opinion or an assurance about promised efforts, neither of which is a legality question. The instruction should also say that exhibit 12 covers the purchase instrument, not the whitepaper, unless the terms of the purchase instrument incorporate the whitepaper. What venues ask of a token opinion today, before any of this is adopted, is on the exchange listing legal opinion checklist.

4. Adopt Rule 400 with a no-admission provision, a clear certifier and a defined analysis

Rule 400 deems a covered investment contract to have ceased to exist where the issuer has completed or permanently ceased all promised essential managerial efforts, is not making and does not intend to make new promises, and files Form TR. Form TR requires a first-person certification (“I certify that I have completed or otherwise permanently ceased all essential managerial efforts ...”) and “an analysis supporting your certification”, signed by an officer or other duly authorised person. No staff review is required, but the Commission may still challenge the filing and others may still assert that the asset is a security. RFC 130 asks whether a bare certification should suffice, and RFC 134 asks how to address the concern that reliance is “a tacit admission” that an investment contract existed and the filer was its issuer.

We support Rule 400. Non-US issuers that sold tokens only offshore and never took the position that an investment contract existed face the concern RFC 134 describes. The 2026 Interpretation states that separation does not cure earlier violations, so a filing that looks like an admission is costly. These issuers also have no Rule 103(b)(1) record of promised efforts, which the Commission expects the analysis to draw on. For an entity, the first-person certification leaves unclear whether “I” is the signing officer or the issuer. We recommend adding Rule 400(c):

“Neither the filing of a transition report on Form TR nor reliance on this section shall be deemed an admission that the crypto asset was at any time subject to an investment contract, that the filer was an issuer of any security, or that any offer or sale was required to be registered. The fact that a person has not relied on this section shall not create any presumption that a crypto asset is or was subject to an investment contract.”

The adopting release should say that the Commission will not treat a Form TR filing as an admission. Item 2 should be recast so that the issuer certifies through its authorised signatory, to the best of the signatory’s knowledge after reasonable inquiry, and may do so “to the extent any covered investment contract existed”. The analysis requirement should stay: a bare certification that the Commission may challenge and others may ignore tells investors little. The analysis should identify each promised essential managerial effort, in the issuer’s own words and with its source, since fulfilment is judged by the issuer’s own description; the evidence and date of completion or cessation for each; the activities the issuer continues and why they are not essential managerial efforts; and, for issuers without a Rule 103(b)(1) record, the documents and statements relied on. The Proposing Release makes the safe harbor available to any issuer that satisfies its conditions, including issuers that have not used the exemptions; the adopting release should confirm that this includes non-US issuers that sold only offshore under Regulation S, and that filing Form TR is not itself an offer or a directed selling effort. Rule 400 is not in force; how the March 2026 interpretation analyses separation is on is my token a security.

5. Allow reuse of MiCA and VARA disclosure with a reconciliation

Rule 103(a) provides that information “should be consistent with” the issuer’s public statements and “promotional materials (such as whitepapers)”. The Proposing Release describes website posting of disclosure under Rule 200(d)(1) as “compatible with this existing practice” of posting whitepapers. RFCs 28 to 30 and 32 ask about additional requirements, examples, guidance and delivery.

Teams that also offer in the European Union or Dubai generally must publish a regulated disclosure document. In the European Union, unless an exemption such as MiCA Article 4(2) applies, an offeror to the public of a crypto-asset other than an asset-referenced or e-money token draws up a white paper with the Annex I content, notifies it without prior approval, publishes it, and is liable for it without contractual exclusion. In Dubai (outside the DIFC), an issuer in the Emirate publishes a whitepaper with the Schedule 1 disclosures and a risk disclosure statement and may not exclude civil liability; a Category 2 token is placed only through a VARA-licensed distributor, which files both documents with VARA and waits 15 working days for any comment or objection, and the issuance is never deemed approved by VARA. Much of this content overlaps with Rule 103(b), including management, milestones, use of proceeds, rights, technology and risks, but neither regime asks for Rule 103(b)(1) disclosure of promised essential managerial efforts and progress. Separate documents, each carrying liability, invite the inconsistency that Rule 103(a) seeks to avoid. Substituted compliance based on foreign authorisation would not fit, because MiCA does not approve these white papers and VARA does not approve Category 2 issuances.

We recommend a note to Rule 103:

“An issuer may provide information required by paragraph (b) of this section by including in its disclosure information prepared in accordance with the disclosure requirements of another jurisdiction, provided that the disclosure (i) is in English; (ii) includes a table identifying, for each item in paragraph (b), where responsive information appears; (iii) includes all information required by paragraph (b) that the other document does not contain, including the information required by paragraph (b)(1); and (iv) is provided in the manner required by the applicable exemption. Information so included is disclosure of the issuer under this section for all purposes.”

The staff could also publish a non-exclusive crosswalk from MiCA Annex I and VARA Schedule 1 to Rule 103(b). US investors would receive every Rule 103(b) item, in English, under US liability, and the issuer would maintain one core disclosure document across markets, with a US supplement. Our response to the MiCA review consultation sets out what we asked the European Commission to change in MiCA; what CASP authorisation asks of a non-EU team is on MiCA authorisation.

What happens next

The Commission may adopt the proposal, revise it or re-propose it, and nothing in it is in force until it acts. Congress has not legislated either: on 15 September 2026 the Senate failed to invoke cloture on the CLARITY Act (H.R.3633), so nothing in that bill is enacted. The Commission’s March 2026 interpretation, Release No. 33-11412 (91 FR 13714, 23 March 2026), withdrew and superseded the 2019 Framework; it is the interpretation whose separation analysis the proposed safe harbor partly codifies. What that means for the US leg of an opinion, and who signs each leg, is on the token legal opinion page; the classification tests, regime by regime, are on is my token a security.

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Who we are

Infinilex is a cross-border legal, compliance and structuring consultancy for founders building across India, the United Arab Emirates and the United States, with a Web3 practice. Infinilex counsel qualified in India, the UAE and the US sign opinions for those jurisdictions; for the EU and other jurisdictions Infinilex scopes and coordinates the local counsel who sign. What a token legal opinion concludes today, and who signs each leg, is set out on that page. This letter is the US counterpart of our response to the European Commission’s MiCA review consultation.

This page states general positions taken in a public comment letter and is not legal advice. The rule text quoted here is the proposal as published on 18 August 2026 and the letter as filed on 6 October 2026.