Galaxy Research sees the Securities and Exchange Commission’s (SEC) proposed Regulation Crypto Assets as a potential catalyst for a new wave of U.S. token issuance, describing the framework as a possible “ICO 2.0” if adopted.
In an X post on Friday, Alex Thorn, Galaxy’s Head of Firmwide Research, said the proposal could provide a regulated route for projects to raise capital from the public, including some non-accredited investors, while also addressing the securities-law status of tokens that have already been issued.
The SEC proposed the rules on August 18, creating two exemptions for certain investment contracts involving crypto assets and a separate mechanism that could allow the investment contract associated with a token to end after an issuer completes or abandons its promised development efforts. The proposal is not yet final, and its eventual effect on token issuance will depend on the final rules and whether the SEC adopts them substantially as proposed.
SEC proposal creates new route for token sales
Under the proposed framework, eligible issuers could use one of two exemptions from securities registration requirements. The first would allow an issuer to raise to $5 million over four years through a startup exemption. The second would permit offerings of up to $75 million in 12 months, subject to additional requirements.
The larger exemption would be divided into tiers, with the SEC’s proposal setting different offering limits and requirements. Issuers would have to meet disclosure, reporting, and financial-statement obligations, with additional requirements applying to larger offerings.
The framework is aimed at crypto assets that are not themselves securities but were offered or sold as part of an investment contract involving an issuer’s efforts to develop a project. Tokenized stocks, bonds and other arrangements involving securities would fall outside the proposed regime.
Galaxy points to an “ICO 2.0” possibility
Thorn argues that the proposal could eventually revive one of crypto’s original capital-raising models: selling tokens to users and investors rather than relying entirely on traditional venture financing.
The difference, according to Galaxy’s analysis, would be the regulatory structure around those sales. The proposed regime would require issuers to provide information tailored to crypto assets, including token supply and distribution schedules, minting and burning mechanisms, governance arrangements, smart-contract permissions and source-code information.
Issuers would also have to explain what they have promised to build and the progress made toward those objectives. That structure could address one of the weaknesses associated with the 2017-era initial coin offering (ICO) market, when projects raised capital through token sales without the disclosure and regulatory framework that would accompany a traditional securities offering.
Galaxy’s characterization of the proposal as a potential “ICO 2.0” is an assessment of its possible market impact, rather than a description of an SEC policy goal.
Grayscale also sees token fundraising returning
Grayscale reached a similar conclusion in an August 19 report, saying the SEC proposal could bring token-based fundraising back to the U.S.
The firm said clearer rules could encourage projects that previously structured launches offshore to raise capital domestically, potentially increasing activity on public blockchains including Ethereum, Solana and BNB Chain.
Grayscale said the impact could extend beyond issuers to U.S. investors, many of whom have faced restrictions on participating in token launches because of regulatory uncertainty. A broader return of token fundraising could therefore bring more projects and capital to public blockchain networks.
A possible exit for existing tokens
The proposal could affect more than new token sales.
The SEC would establish a mechanism under which the investment contract associated with a covered crypto asset could cease to exist once the issuer completes or permanently stops its promised essential managerial efforts, makes no new promises to perform those efforts, and files the required transition report.
The mechanism could also apply to certain tokens that were issued before the proposed exemptions came into effect. That provision could make the framework relevant to existing projects whose tokens have continued trading while their securities-law status has remained contested or uncertain.
Galaxy estimates that the standalone safe harbor could affect significantly more issuers than the proposed fundraising exemptions. The SEC’s paperwork estimates assume about 475 issuers a year would use the investment-contract safe harbor, compared with about 130 offerings a year under the two new exemptions.
That estimate suggests the framework’s initial effect could be more about addressing existing tokens than triggering a surge in new issuance.
Public token sales would come with limits
The proposal would not amount to an unrestricted return to the ICO market.
The exemptions contain disclosure, reporting, and eligibility requirements. The larger offering exemption also includes requirements tying the issuer, management, business operations and assets more closely to the U.S. Non-accredited investors would face investment limits under the proposed framework.
The SEC would also preempt certain state registration and qualification requirements for covered offerings and some secondary transactions while issuers remain compliant with the framework.
The proposal does not establish a comprehensive regulatory regime for crypto exchanges, brokers, dealers or custody providers. It is also separate from the SEC’s proposed innovation framework for tokenized securities and onchain trading.
SEC proposal still faces a long path
The SEC’s proposal follows its March 2026 interpretation addressing how federal securities laws apply to certain crypto assets and transactions. All three sitting SEC commissioners, Chairman Paul Atkins and Commissioners Hester Peirce and Mark Uyeda, issued statements supporting the proposal, according to Galaxy’s analysis.
The SEC is accepting public comments for 60 days following publication in the Federal Register.
Galaxy’s Thorn said the framework could provide more certainty for token issuers, but also noted that SEC rulemaking would not provide the same durability as legislation passed by Congress. That distinction could matter if a future SEC changes course or courts challenge provisions of the rule, particularly its treatment of state requirements.
For now, the proposal offers a possible regulatory framework for token issuance and a mechanism for ending certain investment-contract obligations. Whether that develops into the “ICO 2.0” envisioned by Galaxy will depend on the final rule and how issuers respond to its compliance requirements.
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