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In this week's edition, Alex Thorn breaks down the SEC’s long-awaited Regulation Crypto proposal; Lucas Tcheyan explains the broader significance of Stripe’s deal to acquire OpenRouter; and Zack Pokorny unpacks Centrifuge’s plan to convert tokens to equity.
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SEC Proposes Long-Awaited Regulation for Primary Token Issuance
The Securities and Exchange Commission on Aug. 18 proposed Regulation Crypto Assets ("Reg Crypto"), the first set of U.S. securities rules designed specifically around the offer and sale of crypto assets rather than adapted from rules written for corporate stock.
First, the proposal would create a lawful path to sell certain tokens to the U.S. public, including non-accredited buyers, without a registered offering. Second, it would create a formal, dated mechanism for the investment contract associated with a token to cease to exist. For most of the past decade, a U.S. token issuer effectively chose between registering (which almost none could practically do) and issuing offshore. Reg Crypto offers a third option, along with an off-ramp for thousands of tokens already trading with unresolved legal status.
The rule would apply only to a crypto asset that is not itself a security but was offered or sold as part of an investment contract under which the issuer promised to build something. Tokenized stocks and bonds, and arrangements that bundle a token with equity or other securities, sit outside the framework by design. Within that perimeter, the proposal follows four stages:
Raise. A one-time startup exemption would allow an issuer to raise up to $5m over as many as four years, with public filings at the beginning and end of the period. A larger exemption modeled on Regulation A would permit offerings of up to $20m or $75m, depending on the tier, over a 12-month period. This fundraising exemption would require SEC qualification, ongoing reporting, financial statements (audited for Tier 2 offerings), and an issuer with substantial organizational, management, and asset ties to the U.S. Unaccredited buyers would be limited to 10% of their annual income or net worth, whichever is higher.
Disclose. Issuers would provide purpose-built information covering token supply and release schedules, mint-and-burn mechanics, governance and smart-contract permissions, source code, and - most importantly - what the issuer promised to build and how far along it is.
Build. The startup exemption would provide a runway of no more than four years during which the issuer could carry out its promised essential managerial efforts.
Exit. Once the issuer has completed or permanently ceased those efforts, is making no new promises to undertake them, and files a transition report, the covered investment contract would be deemed to have ceased to exist. The SEC would then treat the crypto asset as no longer subject to that investment contract under the Securities Act and Exchange Act. The safe harbor would also be available to issuers that never used either fundraising exemption, which is what makes it relevant for tokens issued years ago.
Scale helps frame the likely impact. For paperwork-estimation purposes, the SEC assumes approximately 475 issuers a year would use the investment-contract safe harbor, compared with 130 annual offerings under the two new exemptions. That suggests the near-term effect may be to resolve the securities-law status of existing assets rather than unleash a wave of new issuance. Covered investment contracts sold under either exemption would not be restricted securities and, absent a contractual limitation, could be resold immediately.
The proposal would also preempt state registration and qualification requirements for covered primary offerings and certain secondary transactions while the issuer remains current with its obligations. It does not address exchanges, brokers, dealers, or custody, and it is not the separate innovation exemption the SEC has discussed for tokenized securities and onchain trading. Comments are due 60 days after Federal Register publication. The SEC canceled its scheduled Aug. 14 open meeting and released the proposal four days later. All three sitting commissioners - Chairman Paul Atkins and Commissioners Hester Peirce and Mark Uyeda - issued supportive statements. While comments are due in 60 days, adoption before 2027 would be a fast timetable.
OUR TAKE
As we wrote last week, Atkins’ SEC is moving forward with some regulatory clarity for crypto even while the Senate remains stalled on the CLARITY Act. Reg Crypto is a constructive step, and one of the clearest signs yet that the SEC is not waiting for Congress to modernize its own rulebook.
The disclosure regime is the clearest evidence that the Commission understands the assignment. It asks for supply and release schedules, mint-and-burn mechanics, smart-contract permissions, a source-code link, the structure of the ecosystem, and a running account of what the issuer promised to build and how far along it is. These are the facts that matter to a token buyer, and they are not the same facts that matter to a buyer of corporate equity. The Commission is recognizing something it refused to recognize under Atkins’ predecessor, Gary Gensler: a token issuance differs from an equity issuance in both form and function, and the disclosure investors need should differ accordingly.
The proposal makes an equally important recognition about time. Equity is permanently a security. Under Reg Crypto, the investment contract associated with a token can begin at issuance, govern the issuer's obligations while the project is being built, and then end on a publicly recorded date even though the token continues to exist and trade. That is more than a new exemption. It is a workable theory of the token lifecycle, translated into an administrable rule.
Whether issuers will use the fundraising exemptions is the open question. Rule 506 under Regulation D remains available with no offering cap, no SEC qualification process, and no ongoing public-reporting regime. Against that, Reg Crypto offers lawful public distribution to non-accredited buyers, unrestricted securities that can be transferred immediately, and preemption of state registration requirements. For a project that wants its token to circulate rather than sit in venture capital investors' wallets, the absence of a federal holding period may be the most underrated provision in the entire proposal. The price is a real disclosure and reporting burden and, for the larger exemption, a substantial U.S. nexus.
That last condition creates another test. Token projects have frequently used offshore foundations for reasons extending beyond U.S. securities law, including governance, treasury management, and tax treatment. The larger Reg Crypto exemption asks many of those projects to bring the issuer, management, business administration, and a majority of assets substantially onshore. Until the U.S. tax treatment of token-sale proceeds and treasury allocations becomes clearer, that requirement may be enough to preserve existing structures. The startup exemption has no equivalent U.S.-incorporation requirement and could see disproportionate early uptake for that reason alone, despite its $5m ceiling.
If those questions resolve favorably, the interesting scenario is an ICO 2.0 that is actually legal. One of crypto's early use cases was capital formation: allowing projects to raise money from their prospective users rather than relying exclusively on venture investors and traditional placement infrastructure. The 2017 cycle demonstrated both the demand for the initial coin offering model and the consequences of attempting it without credible disclosures, investor protections, or enforceable rules. Reg Crypto supplies much of what was missing: exemptions sized for different raises, disclosure written for the asset, lawful retail participation within a cap, and a defined endpoint for the issuer's securities-law obligations.
A new services layer would almost certainly emerge around it. Securities lawyers, auditors, technical-disclosure specialists, launchpads, and compliance providers would all benefit from helping projects prepare offering materials and transition reports, much as Regulation A+ produced its own cottage industry. The likely first movers are teams that already have U.S. entities, relatively clean organizational structures, and the resources to absorb the reporting burden. The SEC estimates that a transition report under the standalone safe harbor would require an average of 30 burden hours, including outside professional services, which suggests that even the "exit" will rarely be a do-it-yourself filing.
In the near term, however, the exit matters more than the raise. The first visible effect of Reg Crypto is more likely to be a cleanup of legacy tokens than a resurgence in U.S. token sales. That alone would be significant: the market has spent years trying to infer from speeches, settlements, and litigation when an investment contract ends. (Remember “sufficiently decentralized”?) Reg Crypto would replace that ambiguity with a filing and a date.
But this remains a proposal, not a rule, and even an adopted rule would remain vulnerable. Atkins used his own statement to argue that legislation is indispensable to prevent a future regulator from unwinding the SEC's work, which is an accurate assessment of how reversible this regime would be. State regulators may also challenge the proposal's broad preemption provisions.
Reg Crypto could provide meaningful regulatory clarity, but only Congress can make that clarity durable. - Alex Thorn
Stripe Agrees to Buy OpenRouter as It Embraces ‘The Singularity’
On Wednesday, Stripe announced a deal to buy OpenRouter, the leading AI model gateway that routes requests across 400+ models from more than 80 providers. It would be the payment processor’s largest-ever acquisition.
OpenRouter processes over 10 trillion AI tokens per day for more than 10 million developers and companies, with token volume compounding at 9% per week year-to-date. Deal terms were undisclosed but reports put the price at $7.5 billion to more than $8 billion.
In its investor letter, Stripe framed the deal as recognition that capital and intelligence are now the two core digital flows for every business. Previously, e-commerce developers needed reliable tools for their revenue pipelines (providing such tools was Stripe’s original business). Now, they will equally need tools for their intelligence pipelines. Intelligence is “expensive, heterogeneous, and constantly changing,” requiring the same granular cost-and-return calculus applied to financial capital. This customizability—choosing models by task complexity, price, speed, and reliability amid weekly releases—is what made OpenRouter essential.
The same day the deal was announced, corporate expense-management platform Ramp launched Router.com, a competing single-endpoint router that directs each request to the lowest-cost model meeting performance needs. Built internally over three years, it cut Ramp’s own costs ~30% and is delivering ~40% average savings for early users. Routing is free through 2026 (users pay list-price tokens); it is U.S.-only for now and supports OpenAI, Anthropic, xAI, DeepSeek, Nvidia, and others.
OUR TAKE
Stripe’s letter crystallizes a shift that has been building for months. Inference is becoming as core a corporate function as payments. The same firm that spent a decade abstracting the messy realities of global money movement is now treating token routing with identical seriousness. Why? Because the surface area of decision-making (which model for this exact prompt, at what price and latency, with what fallback) has exploded into a highly customizable, continuously shifting matrix. OpenRouter will not be a feature add-on to Stripe. It is the intelligence-pipeline counterpart to Stripe’s revenue pipeline tool. Acquiring it embeds Stripe in the middle of both capital flows and intelligence flows.
Equally striking is how one of the largest and most innovative payments providers views crypto rails. As revealed in Stripe’s letter to its investors, stablecoins, programmable custody, and purpose-built chains are no mere side experiments. They are the native payment surface for agents. Agents will increasingly discover services, negotiate terms, consume intelligence, and settle value. Stripe is deliberately constructing the full agentic stack so an autonomous system can provision itself, route tokens efficiently, pay in stablecoins, and hold funds without human friction. That is a direct, high-conviction bet that the AI economy will run on crypto-native money rails at a meaningful scale.
Ramp’s simultaneous launch sharpens the competitive picture. Both companies are racing to own the tollbooth on token traffic. Stripe brings unmatched developer distribution and payments infrastructure while Ramp brings deep visibility into corporate AI budgets and a cost-first routing philosophy. The result should be faster price discovery and better tooling for enterprises but also rising questions about long-term neutrality once these gateways sit inside large platforms.
The broader implication is that durable value in AI is migrating upstream from any single model to the orchestration and economic layers that allocate, meter, and monetize intelligence. Stripe’s letter treats this acquisition as the natural extension of its mission of growing the GDP of the internet. The same kind of infrastructure that once unlocked online commerce is now required for multi-model, agent-driven commerce. Expect more entrants, and more aggressive cost optimization, as every serious company realizes that the difference between using the right model and the wrong one is a material P&L line. -Lucas Tcheyan
Centrifuge Weighs Converting Tokens to Stock, Highlighting Gaps in Law
Centrifuge, a platform for tokenizing real-world assets, proposed a token-to-equity conversion program that would allow some holders of its native token CFG to convert their tokens into company equity. According to Centrifuge Improvement Proposal (CIP) 172, as Centrifuge’s institutional adoption has grown, the trade-offs of operating with a public token have become increasingly apparent. These include constraints around institutional participation and governance, regulatory overhang, and the ongoing costs of maintaining public token liquidity and market infrastructure.
Under the proposed plan, Centrifuge Network Foundation would re-register as a Cayman Islands company, and eligible CFG holders could subscribe for tokenized equity at a rate of one CFG token per share. Holders of 100,000 CFG or more would be entered directly into the share register; smaller holders would be routed through a CoinList-administered trust structure. Participation in the program would be optional, and holders who don’t convert could keep or sell their CFG. Centrifuge said it would work to maintain market liquidity during a defined conversion window. Notably, there was no mention in the proposal of a token buyback program as seen in similar proposals in the past.
The proposal’s stated goals are to unlock institutional and venture capital that a token structure inhibits, accelerate growth, and create a single, cleaner value-accrual mechanism instead of a split token/equity structure.
OUR TAKE
This is an example of yet another major protocol (Centrifuge holds more than $1.6 billion in total value locked) seeking to remove the token and DAO governance from the value and operational stacks. This was also seen with Across protocol this year (covered by Galaxy Research in March). Despite the equity conversion structures taking different approaches, the proposals cited similar motivations around improving long-term protocol growth and better tapping institutional investor bases.
The proposal underscores the difficulty and limitations of operating with a token compared to equity today, specifically for organizations that sit awkwardly between the blockchain-native and traditional financial worlds. Using Centrifuge and Across as a guide, the main issues of the current DAO/token structure appear to pool around legal and regulatory gaps as opposed to being an outright admission that the model will never work. This is evident in the frictions each proposal highlighted, which included the difficulties under the token/DAO wrapper of entering enforceable contracts and revenue agreements with institutional counterparties, compliance hurdles, and governance participation. As a result, we don’t believe the severity of these issues will persist in perpetuity and expect the DAO/token model to undergo a wider experimentation phase in the coming years.
Certain developments underway may address the regulatory and legal frictions through diverging channels. On the compliance and regulatory overhang side, the CLARITY Act’s “mature blockchain system” designation and the SEC’s proposed Regulation Crypto Assets and its safe harbor from “investment contract” status, directly target the regulatory exposure and compliance costs/difficulty Centrifuge and Across each cited. (Unfortunately, CLARITY’s odds of passage this year have slimmed considerably, though President Trump did urge Congress to pass a “fair version” of the bill during a press conference Wednesday.)
On the enforceability side of the coin, a separate wave of state-level legislation (e.g. Wyoming’s DUNA framework, and similar DAO-entity statutes in Utah, Vermont, and the Marshall Islands) gives DAOs a path to legal personhood, letting them be recognized as separate legal entities that can engage in binding contracts, own assets, and enter revenue agreements with institutional counterparties.
Combined, these mechanisms address some of the components outlined in each of the past two major protocol token-to-equity conversion programs, which suggest tokens’ disadvantages relative to equity may be a function of today’s regulatory and legal gaps rather than something inherent to the token/DAO structure itself. - Zack Pokorny
Other News
🐈 Trump backs CFTC bringing Hyperliquid onshore; HYPE and PURR rally
👔 Citi to offer crypto custody for institutional clients this year, starting with bitcoin
🔮 Cantor Fitzgerald offers institutions prediction market block trading on Kalshi
💻 CFTC seeks public comment on listing of compute derivative contracts
🇯🇵 Japan’s Metaplanet to invest 2.1k BTC in Nasdaq-listed SLE to launch U.S. DAT ...
₿ ...as Nasdaq-listed Chinese insurtech Zhibao raises $154m PIPE (paid in BTC)
📋 U.S. Treasury proposes stablecoin regulations under GENIUS Act
⛏️ Cypherpunk Technologies acquires Zcash mining fleet in equity deal with Winklevii
🤪 Arthur Hayes comes out of retirement to lead an AI x crypto project
🦅 Trump family’s World Liberty gets preliminary approval to open trust bank
Charts of the Week: Bitcoin Enters the Goldilocks Zone
Where is bitcoin now in the cycle? A useful exercise is to compare the spot price over time to three broad categories of models: ceiling models (typically based on long-term moving averages), which identify bull peaks when the market is extended above the historical trend; cost-basis models, which use onchain data to estimate whether current holders are in profit (and hence their motivation to sell, depending on how long they’ve held); and floor models, which detect when selling pressure exhausts.
Looking back over more than a decade and a half, every major market top (2013, 2017-18, 2021) saw the price touch or break the dashed ceiling models. Every major crash found support near the dotted floors.
This week BTC ripped through the 200-week moving average floor and through the shorter-period Pi Cycle (111-day simple moving average) and short-term holder realized price cost bases. As of Thursday morning, bitcoin is now trading above all the floors and cost bases but well below the ceiling indicators. The implication is that capitulation is over. Holders are in profit across cohorts (no forced selling from underwater positions), and the price has room to run. Not necessarily the bottom, but possibly close.
For more insights, follow @glxyresearch on X.
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