The Securities and Exchange Commission proposed new rules on Tuesday that would create a dedicated offering framework for crypto assets, establishing the agency's first formal regulatory regime for digital token sales under the federal securities laws.
The proposal, titled "Regulation Crypto Assets," includes two exemptions from registration requirements under the Securities Act of 1933. The first, a "startup" exemption, would allow issuers to raise up to $5 million over a four-year period. The second, a "fundraising" exemption, would permit offerings of up to $75 million in each 12-month period and comes with more extensive disclosure obligations, including financial statements and ongoing reporting requirements. Issuers pursuing either path would need to make narrative disclosures to investors grounded in principles-based standards, and neither track would shield them from the securities laws' antifraud and antimanipulation rules.
The proposal also includes a conditional safe harbor from the definition of "investment contract" under securities law. If an issuer completes or permanently ceases all essential managerial efforts it promised under a covered investment contract, and files a transition report with the commission, the underlying crypto asset would be deemed no longer subject to those securities definitions, the SEC said.
"As we continue the Commission's efforts to provide clarity for crypto markets, and as Congress works to establish a lasting regulatory framework, Regulation Crypto Assets seeks to provide crypto asset entrepreneurs and market participants with clear pathways to raise capital under the federal securities laws," SEC Chairman Paul Atkins said in a statement.
The proposal would also preempt state securities law registration and qualification requirements for offerings conducted under the new exemptions, as well as for certain secondary market transactions.
Once the proposal is published in the Federal Register, the public will have 60 days to submit comments.
The development comes as Congress has struggled to pass the Digital Asset Market Clarity Act. The bill cleared the Senate Banking Committee in May but faces a difficult path to becoming law, requiring at least seven Democratic votes on the Senate floor. The Senate departed Washington for recess without voting on the bill, and a procedural vote is scheduled for September 15. The SEC and CFTC were also preparing to step in with agency-level rules as the bill's prospects dimmed, with industry supporters warning that regulatory rules alone offer a more fragile foundation than legislation and could be unwound by a future administration.
Atkins acknowledged the point on Tuesday. "Legislation remains indispensable to enacting 'future-proofed' rules of the road that are durable enough to protect the work we are undertaking today from being unwound by a future rogue regulator," he said.
The Digital Chamber expressed support for the proposal and indicated it plans to engage with the SEC throughout the rulemaking process, according to CoinDesk.