Burrell Law, P.C. | September 14, 2026
Two developments over the past few weeks, one regulatory, one judicial, are worth a closer look together, because they push in the same direction: more breathing room for issuers and corporate defendants navigating federal securities law. The SEC has proposed its most concrete crypto rulemaking to date, and the Second Circuit has just made it meaningfully harder for plaintiffs to plead their way past a motion to dismiss in securities fraud cases. For our corporate, securities, and crypto clients here in New York, both are worth understanding now, not after the ink dries.
The SEC’s New Crypto Safe Harbor
On August 18, 2026, the SEC proposed Regulation Crypto Assets, its first detailed rulemaking attempt to give crypto issuers and market participants a workable path through federal securities law rather than relying on case-by-case enforcement guidance. The proposal has three moving parts worth flagging for clients:
A conditional safe harbor would exclude certain crypto assets from being treated as “investment contracts”, and therefore securities, provided the issuer satisfies specified conditions. For tokens that qualify, this could meaningfully change how they’re offered, custodied, and traded.
Two new registration exemptions would open up capital-raising options short of a full securities registration: a one-time exemption for offerings up to $5 million over a four-year period, and a larger exemption for offerings up to $75 million in any 12-month period. Both require principals-based narrative disclosure to investors; the larger exemption additionally requires financial statements and ongoing reporting.
Notably, the proposal would also preempt state securities registration requirements for qualifying offerings and certain secondary market transactions — a significant development for issuers who currently have to blue-sky across multiple states, including New York.
The comment period runs 60 days from Federal Register publication, so this is still a proposal, not final law. But it’s the clearest signal yet of where the Commission intends to land, and clients weighing a token offering or restructuring an existing one should start thinking now about whether they’d qualify for the safe harbor or either exemption.
Sources: SEC press release; proposed rule, Regulation Crypto Assets; Chair Atkins’s statement.
The Second Circuit Raises the Bar on Loss-Causation Pleading
Meanwhile, on the litigation side, the Second Circuit handed corporate defendants a significant win in Huey v. Anavex Life Sciences Corp., No. 25-1752 (2d Cir. June 26, 2026), affirming dismissal of a securities fraud complaint on loss-causation grounds.
The court declined to adopt a rigid rule requiring an immediate stock price drop following a corrective disclosure, but it made clear that where the stock doesn’t fall right away, or falls no more than the broader market, plaintiffs face a considerably steeper pleading burden. They now need to plead specific facts explaining why the loss wasn’t immediate and rule out ordinary market movement as the real explanation, evaluated against the full context of timing and market conditions surrounding the disclosure (Huey at pp. 24-25).
In practice, this gives defendants a stronger hand at the motion-to-dismiss stage whenever a stock’s post-disclosure movement tracks the broader market or takes time to materialize, a fact pattern that comes up often. Companies facing securities claims in the Second Circuit (which of course includes the Southern and Eastern Districts of New York) should be building the market-context record early, since Huey gives courts real room to dismiss on causation grounds without reaching the merits of the alleged misrepresentation.
What It Means Together
Neither development exists in isolation. Read together, they reflect a securities law environment that, at least for the moment, is giving issuers more structured room to raise capital in the crypto space and giving corporate defendants a firmer shield once a fraud claim actually lands in court. For crypto issuers, the SEC’s proposal is a reason to start structuring now around a rule that isn’t final yet. For any New York company that finds itself on the receiving end of a securities fraud complaint, Huey is a reminder that loss causation is no longer a box plaintiffs can check with a bare stock-drop allegation, and that’s a real opening at the pleading stage.
We’ll be watching both as they develop: the SEC’s comment period closes in mid-October, and we expect to see Huey cited in motions to dismiss across the Second Circuit almost immediately.
This post is for general informational purposes only and does not constitute legal advice. If you have questions about how these developments affect your company, please reach out to Burrell Law, P.C.
