The U.S. Securities and Exchange Commission on Aug. 18 released a proposal titled Regulation Crypto Assets, laying out a securities issuance framework tailored to crypto-related investment contracts. The move comes only days after Chain News previously reported that the SEC had paused and delayed the Reg Crypto proposal, with the framework now surfacing in formal text with specific thresholds.
Two fundraising exemptions with defined caps
The proposal builds on the SEC’s interpretive release from March this year on how federal securities laws apply to crypto assets. At its core, it creates two exemptions from registration under the Securities Act of 1933 for crypto issuances.
The first is a one-time exemption that would let an issuer raise up to $5 million over a four-year period. The second would allow an issuer to raise up to $75 million during any 12-month period.
Both exemptions would require issuers to provide investors with principle-based narrative disclosures. Issuers relying on the second exemption would also need to include financial statements and take on ongoing reporting obligations.
SEC Chair Paul Atkins said the proposal is meant to give crypto entrepreneurs and market participants a clear fundraising path within the federal securities law framework.
Conditional safe harbor for investment contracts
Beyond the fundraising exemptions, the proposal sets out a conditional safe harbor for investment contracts. If a crypto asset satisfies the safe harbor’s requirements, it would be treated as falling outside the definition of an investment contract under the term “security” in both the Securities Act of 1933 and the Securities Exchange Act of 1934.
Atkins said the safe harbor could apply once an issuer has completed, or permanently stopped, all core managerial and operational efforts promised under the investment contract. That tracks the view that an asset may cease to be a security once it becomes sufficiently decentralized.
Federal preemption and 60-day comment window
The SEC also said securities issued under the proposal’s exemptions, along with their offer and sale and some secondary-market transactions, would be exempt from state securities law registration and qualification requirements. In practice, that would give federal rules priority and avoid a patchwork of state-level standards.
According to the agency, the rule package is designed to clarify when crypto assets fall under federal securities laws, reduce incentives for issuers to go offshore, and widen access for U.S. investors under a more consistent investor-protection regime.
The proposal will be open for public comment for 60 days after publication in the Federal Register. It marks the next step after the SEC’s earlier preview of the Reg Crypto framework, turning the questions of how token offerings can legally raise capital and when an asset may no longer be treated as a security into proposed rule text.