---
type: claim
domain: internet-finance
description: "Three proposed safe harbors — startup ($5M/4yr), fundraising ($75M/12mo), and investment contract termination — create defined capital formation pathways that could accommodate futarchy-governed vehicles without securities registration"
confidence: experimental
source: "Chairman Atkins remarks on Regulation Crypto Assets (March 17, 2026)"
created: 2026-03-18
---

# The SEC three-path safe harbor proposal creates the first formal capital formation framework for crypto that does not require securities registration

Chairman Atkins previewed "Regulation Crypto Assets" with three safe harbor pathways:

1. **Startup Exemption:** Raise up to ~$5M over up to 4 years with "regulatory runway" to reach maturity. Requires public disclosure and SEC notification. Designed for early-stage projects that need time to build toward decentralization.

2. **Fundraising Exemption:** Raise up to ~$75M within 12 months. Requires detailed financial statements and operational disclosures. Can be combined with other exemptions. Designed for larger capital formation events.

3. **Investment Contract Safe Harbor:** A crypto asset ceases being a security once the issuer "completes or stops key managerial efforts tied to the project." This operationalizes the termination doctrine into a practical safe harbor.

These remain proposals — formal rules expected for public comment "in the coming weeks," anticipated to exceed 400 pages. But the direction is clear: the SEC is building defined pathways for crypto capital formation outside the securities registration framework.

For Living Capital vehicles, the $75M fundraising exemption is directly relevant — it could accommodate futarchy-governed investment vehicles raising capital without full securities registration, provided disclosure requirements are met. The investment contract safe harbor is equally important: once a Living Capital vehicle's futarchy governance is operational, the argument for termination of securities status becomes available.

The key limitation: these are proposals, not final rules. The rulemaking process could modify thresholds, add conditions, or narrow scope. The investment contract safe harbor's criteria for "completes or stops key managerial efforts" remain undefined — the precise threshold matters enormously for futarchy projects that argue their governance structure inherently disperses managerial effort.

---

Relevant Notes:
- [[the SECs investment contract termination doctrine creates a formal regulatory off-ramp where crypto assets can transition from securities to commodities by demonstrating fulfilled promises or sufficient decentralization]] — the safe harbor operationalizes this doctrine
- [[Living Capital vehicles likely fail the Howey test for securities classification because the structural separation of capital raise from investment decision eliminates the efforts of others prong]] — safe harbor creates new pathways complementing the structural argument
- [[internet capital markets compress fundraising from months to days because permissionless raises eliminate gatekeepers while futarchy replaces due diligence bottlenecks with real-time market pricing]] — safe harbor legitimizes the compressed fundraising model

Topics:
- [[internet finance and decision markets]]
- [[living capital]]
