U.S. Securities and Exchange Commission (SEC) Chairman Paul S. Atkins delivered a sharp rebuke of Regulation A during Tuesday’s Small Business Capital Formation Advisory Committee meeting in Washington D.C., declaring the framework obsolete for most issuers—including those in the crypto space—and signaling that long-awaited reforms may finally be underway.
Regulation A: A Framework That Hasn't Worked
Speaking on the sixth anniversary of the committee’s founding, Atkins noted that despite raising the offering cap from $50 million to $75 million in 2021, the number of Regulation A offerings has actually declined over the past two years. “Regulation A has not been a viable regulatory framework for widespread use by all issuers, including those offering certain types of crypto asset securities, to raise capital without disproportionate compliance costs,” he stated. The remark directly challenges the assumption that Reg A could serve as a ready-made pathway for crypto token sales.
Cost and Geographic Concentration Plague the Rule
Data presented at the meeting showed that while total capital raised under Regulation A exceeds that of Regulation Crowdfunding and Rule 504 combined, it remains a fraction of the amounts raised under Rules 506(b) and 506(c). Atkins pointed to high compliance burdens—especially the patchwork of state “blue sky” laws—as a major barrier for small firms. He also highlighted an alarming geographic concentration: six states accounted for the vast majority of Reg A filings, while most others saw two or fewer offerings over two years. This disparity underscores the rule’s failure to achieve broad inclusivity.
Key Reform Questions: ATM Offerings and State Preemption
Atkins posed several targeted questions to the committee: Should at-the-market (ATM) offerings—currently prohibited under Reg A—be allowed to improve capital access without sacrificing investor protections? Should Tier 2 secondary resales be preempted from state-level registration to enhance liquidity? He also called for an analysis of why so few states have embraced the rule, hinting that future reforms may streamline disclosure requirements and reduce audit costs.
Why This Matters for Crypto
Atkins’ explicit focus on crypto asset issuers marks a significant tonal shift from the Gensler era. By acknowledging that crypto ventures face “disproportionate compliance costs” under Reg A, he opened the door to tailored reforms that could lower barriers for blockchain-based projects. If the SEC ultimately allows crypto issuers to use Reg A more flexibly—perhaps by accepting crypto assets as consideration or simplifying disclosure for token offerings—it could trigger a wave of compliant digital security issuances and inject liquidity into a market that has long relied on offshore or unregistered structures.
Next Steps and Market Expectations
The Small Business Capital Formation Advisory Committee will gather public feedback over the coming months and draft reform recommendations. Atkins urged members to “think big,” considering both broad overhauls and targeted amendments. Crypto legal experts anticipate a draft proposal by late 2025, which may include raising the offering cap to $100 million, exempting certain state registrations, and permitting crypto as a form of consideration. If enacted, the reforms would hand blockchain projects a compliant, federal-level capital-raising channel comparable to that available to traditional businesses—potentially reshaping the primary market for digital assets.
For now, no official timeline has been set, but Atkins’ blunt assessment has injected fresh momentum into a rule that many had written off. The industry is watching closely for the SEC’s next move.