Modernizing Regulation S for Digital Asset Markets
For years, U.S. crypto projects that wanted to do things by the book have run into a problem: the book wasn’t written for them. Regulation S, which governs offshore securities offerings, was designed for a world of paper certificates, centralized intermediaries, and borders that mattered. In crypto, tokens are permissionless, bearer, and traded globally, making many of Reg S’s mechanics unworkable.
We have a President, a Congress and a SEC bent on making U.S. the crypto capital of the world.
We have payment stablecoin legislation.
We have market structure legislation incoming.
We have a crypto-tailored, U.S.-based entity (the DUNA).
But crypto-native securities (e.g. yield-bearing and synthetic stablecoins, dividend-distributing network tokens, onchain royalty rights, etc.) remain unaddressed. These offerings are and will remain securities, necessitating registration or an exemption (with Reg S being the go-to exemption for retail [non-US] distribution).
Today, I submitted a comment letter to the SEC’s Crypto Task Force explaining why current Category 3 (and much of Category 2) simply doesn’t function for most token issuers. I offer concrete fixes in the form of clear compliance periods for ongoing distributions, digital-native certification and legend practices, and sensible safe harbors that acknowledge the impossibility of perfect U.S. exclusion. I also address how foreign private issuer rules should adapt to globally traded tokens, and why Exchange Act registration triggers need an update for bearer digital assets.
Reg S can be reformed to keep innovation not covered by GENIUS, CLARITY or the RFIA in the U.S. by providing a workable offshore safe harbor for U.S. issuers.
The goal isn’t to loosen compliance requirements, it’s to make them logically coherent when applied to the asset in question. If the U.S. wants crypto innovation re-shored, we need rules built for a global, digital market, not relics of a pre-internet era.
You can read the full letter here.