The U.S. Securities and Exchange Commission’s proposed Regulation Crypto Assets framework could make public token sales easier in the United States, but several lawyers and regulatory experts quoted by Cointelegraph Magazine do not expect it to bring back the freewheeling ICO boom of 2017.
Under the proposal, qualifying issuers would be able to raise as much as $75 million during any 12-month period. Projects could also return to investors in later years as their networks develop, creating a staged fundraising model that may make early allocations more attractive to buyers expecting higher valuations down the line.
Even so, Duke University lecturing fellow and financial regulation expert Lee Reiners said the framework is unlikely to recreate the old ICO mania.
Two exemptions sit at the center of the SEC proposal
The SEC unveiled the proposal on Aug. 18. It would create two exemptions for certain investment contracts involving crypto assets.
The first is a one-time exemption for startups covering offerings of up to $5 million over four years. The second is a larger fundraising exemption that would let issuers raise up to $75 million in each 12-month period.
The larger exemption is modeled in part on Regulation A and carries disclosure and ongoing reporting obligations.
That setup immediately raises a practical question: if the $75 million limit rolls every 12 months, could a project raise $75 million, spend a year building, and then come back for another $75 million?
The article says the answer appears to be yes.
Drew Hinkes, a partner at Winston & Strawn, told Cointelegraph Magazine that the 12-month limit would allow “serial raises” of $75 million every year, “provided they are actually distinct offerings.”
Repeat fundraising would still face SEC review
That does not mean issuers would get unlimited access without new filings.
Lilya Tessler, partner and leader of Sidley’s Global FinTech and Blockchain group, said that while “nothing prevents an issuer from relying on the exemption more than once,” each new raise “isn’t automatic.”
According to Tessler, any later round would require a new offering statement and another SEC staff review. Issuers would also need to continue filing annual and semiannual reports. In addition, they would have to “disclose what the issuer raised under the exemption in the prior 12 months so the cap can be verified.”
Even with those conditions, the proposal would still mark a major shift from the current situation. A project seeking $225 million in total, for example, could potentially raise that amount in separate chunks and return to investors later with a more developed network and a higher valuation.
Could the cap fuel first-round FOMO?
The $75 million ceiling raises another issue. If the first round is capped, early token allocations could become more desirable and encourage fear of missing out among investors trying to get in before later repricing.
Reiners said that is a possible outcome.
Tessler, however, argued that scarcity is not unique to this proposal. She said many token sales and equity offerings already work that way. The article notes that SpaceX sold less than 5% of its total equity during its recent IPO. Tessler said, “Scarcity in both token sales and exempt securities offerings of traditional securities long predate this proposal — issuers have always been able to limit round sizes and can continue to do so.”
Non-accredited investors would also face tighter limits than in earlier crypto cycles. Tessler said the SEC proposal caps their purchases at “10% of the greater of their income or net worth,” no matter which round they enter.
Why this likely will not look like 2017 again
Several factors stand in the way of a repeat of the old ICO era. One is investor memory. The extravagant promises and poor tokenomics attached to many earlier ICOs left heavy losses across the market.
Reiners pointed out that up to 90% of projects funded through ICOs between 2017 and 2019 ended up failing. He said fundraising markets are shaped by “investor appetite, token economics, liquidity, custody, and the reputational damage left by the last ICO cycle.”
The SEC estimates that around 130 offerings would use the two new exemptions each year, while about 475 issuers could use the broader investment contract safe harbor. That suggests a measured flow, not a flood.
Even so, the proposal could still be a meaningful improvement for token issuers trying to avoid the legal minefield around U.S. securities laws. The article points to Tezos and Telegram as examples of projects that faced multimillion-dollar securities-law battles in the United States.
Instead of forcing issuers to decide on their own whether a sale fits inside existing securities-law frameworks, the SEC is proposing a more explicit path for capital raising. Crypto lawyer Jake Chervinsky described that as “not one day too soon.”
Secondary trading may create a new compliance problem
The proposal does not remove every legal risk. It says an investment contract associated with a crypto asset may continue to transfer to later buyers in secondary market transactions until the crypto asset separates from the issuer’s representations or promises.
In practical terms, that means a token described as a non-security could still fall within an investment contract if buyers in the secondary market are led to reasonably expect profits from the essential managerial efforts of the team behind it.
Hinkes said that could create a real problem.
It could also become a challenge for exchanges and other trading venues.
A clearer fundraising route, with old investor-protection questions still in place
Reiners also warned that some tokens may end up in a no-man’s land between security and non-security. In his view, projects may learn to operate inside the new framework without solving the core investor-protection issues underneath it.
That, he said, could leave retail investors in much the same gray area as before, exposed to “opaque disclosures, concentrated insider holdings, and aggressive promotion.”
The SEC proposal may give U.S. token issuers a more defined route for primary fundraising. It does not settle the harder questions around disclosure quality, ongoing obligations, and whether a token has truly moved beyond an investment contract once secondary trading begins.