U.S. Securities and Exchange Commission (SEC) Chairman Paul Atkins delivered a sharp critique of Regulation A during Tuesday’s Small Business Capital Formation Advisory Committee meeting in Washington, D.C., calling the current framework inadequate for a wide range of issuers — including those offering crypto asset securities. The remarks mark a significant shift in the agency’s posture toward digital asset regulation and have been widely interpreted as a precursor to long-awaited reforms.
Regulation A’s Underwhelming Track Record
Atkins highlighted that despite the 2021 increase in the offering cap from $50 million to $75 million, the number of Regulation A offerings has declined over the past two years. He noted that while capital raised under Regulation A has surpassed that under Regulation Crowdfunding and Rule 504 combined, it remains a fraction of the capital raised under Rules 506(b) and 506(c) — the dominant exemptions for private placements.
“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,” Atkins stated. He pointed out that geographic concentration is also a problem: six states account for the majority of offerings, while most others see two or fewer.
Focus on Crypto: High Costs, Low Access
The SEC chair specifically identified crypto asset issuers as a group disproportionately burdened by Regulation A’s requirements. He argued that the high cost of compliance — including audited financial statements and ongoing reporting obligations — often forces blockchain projects to seek funding through less transparent or offshore channels. To address this, Atkins posed several reform questions to the committee:
- Should at-the-market offerings (ATMs), currently prohibited under Regulation A, be allowed to improve capital access without weakening investor protections?
- Should Tier 2 secondary resales be preempted from state regulation to enhance liquidity?
- What targeted amendments could reduce the compliance burden for crypto asset securities?
“We need to assess whether the current framework can be adapted to include digital asset innovation while maintaining our core mission of investor protection,” Atkins added, signaling that the SEC is now open to structural changes that could integrate crypto into mainstream capital markets.
Potential Reforms: A Path to Compliance for Crypto
Industry experts believe that if the SEC follows through, Regulation A could become a viable funding tool for small to mid-sized blockchain projects. Key potential changes include lowering the threshold for audited financials, allowing general solicitation in a broader set of circumstances, and streamlining state-level blue sky reviews. Atkins encouraged the committee to explore both broad and targeted amendments, with a formal report expected within 60 days.
Market reactions were muted but optimistic. Legal analysts noted that a reformed Regulation A would provide a lighter regulatory on-ramp compared to full exchange registration, potentially enabling token-based capital raises with SEC oversight. However, they warned that investor protections must remain robust to avoid fraud risks.
Broader Implications for Digital Assets
Atkins’ remarks come amid a broader SEC reassessment of its approach to digital assets. Earlier this year, the agency signaled flexibility on crypto custody rules and token classification. The Regulation A critique fits into a pattern of incremental modernization rather than abrupt regulatory shifts. If enacted, the reforms could make the U.S. more competitive for crypto ventures that are currently flocking to jurisdictions like Singapore, the UAE, and parts of Europe.
“This is not just about Regulation A. It’s about sending a message that the SEC is willing to adapt its rules to 21st-century capital formation,” said a former SEC official familiar with the discussions. “Crypto projects have been operating in a gray zone. Clear, tailored rules under Regulation A could bring many of them into the light.”
The SEC is expected to publish a formal proposal for Regulation A amendments by early 2027, with public comment periods and potential final adoption later that year. For now, Atkins’ words have provided the clearest signal yet that the U.S. is preparing to overhaul its approach to crypto fundraising.