SEC unveils a new crypto offering framework
The Securities and Exchange Commission on Aug. 18 proposed Regulation Crypto Assets, a framework that would let token issuers raise up to $75 million a year without registering the offering. A separate safe harbor would allow some tokens to move outside the definition of a security entirely.
The proposal targets a long-running question at the center of SEC crypto enforcement: when does a token stop being a security? It lands while the Digital Asset Market Clarity Act is still waiting for a floor vote, leaving rulemaking ahead of legislation for now.
Two exemptions, one cap
The proposal includes a startup exemption that covers up to $5 million raised over as long as four years. Companies using it would need public filings at the start and the end of that period.
It also sets out a fundraising exemption with two tiers, covering $20 million and $75 million of investment contracts over each 12-month period. Tier 2 issuers would have to file audited financial statements and accept ongoing reporting duties modeled on Regulation A. Both exemptions require narrative disclosures based on principles, and both leave issuers subject to the antifraud and antimanipulation provisions of U.S. securities law.
“Regulation Crypto Assets seeks to provide crypto asset entrepreneurs and market participants with clear pathways to raise capital under the federal securities laws,” SEC Chair Paul Atkins said in a statement.
When the safe harbor applies
The safe harbor would apply once an issuer has completed, or permanently stopped, all essential managerial efforts promised under an investment contract. The issuer must also stop making new representations about those efforts and file a public certification with supporting analysis. If those conditions are met, the token would be deemed not to be an investment contract.
The condition builds on SEC guidance released in March on how securities laws apply to crypto assets.
State registration requirements would be preempted for primary offerings made under the rule. The same would apply to secondary transactions by non-issuers, so long as the issuer continues to meet the federal requirements.
Meeting canceled, release published
The SEC canceled an Aug. 14 open meeting that had been scheduled to consider the rules four days before the proposal was published. The release is numbered 33-11434 under file S7-2026-27, and comments are due 60 days after publication in the Federal Register.
At publication, Bitcoin traded at $64,138, up 0.8% on the day, according to CoinGecko. Total crypto market capitalization stood at $2.29 trillion.