SEC proposes tailored capital-raising regime for certain crypto investment contracts
The proposal would create exemptions for offerings of up to $5 million and $75 million, alongside a conditional safe harbor and new disclosure requirements.
By The Third AnglePublished 3 min read
Illustrative financial documents used for the SEC's proposed crypto-asset offering framework; the image does not depict the Commission's release. Photo: Unsplash · Unsplash License
The Securities and Exchange Commission on Aug. 18 proposed Regulation Crypto Assets, a framework that would create tailored securities-law pathways for certain investment contracts involving crypto assets. The proposal follows the agency's March interpretation of how federal securities laws apply to crypto assets and related transactions.
The release describes the plan as a proposal, not an authorization for any particular issuer or token. It would preserve investor-protection requirements while giving qualifying issuers defined routes to raise capital under the Securities Act.
Two proposed exemptions
The first exemption would permit up to $5 million of offerings during a four-year period. The second would permit up to $75 million during each 12-month period. Issuers using either exemption would have to provide principles-based narrative disclosures; the larger exemption would also require financial statements and continuing reports.
The SEC also proposed a conditional safe harbor from the term investment contract in the Securities Act and Exchange Act definitions of security. Under the proposal, a crypto asset could fall outside that definition after the issuer completed or permanently ceased the essential managerial efforts it had represented it would perform, provided the other conditions were met.
What happens next
The SEC says the proposal would preempt state securities-law registration and qualification requirements for offers and sales made under the exemptions, as well as certain secondary-market transactions. The public comment period will remain open for 60 days after the proposing release is published in the Federal Register.
The Block reported that the proposal arrives as broader digital-asset legislation remains stalled in Congress, while the SEC's release frames the rulemaking as a way to provide a nearer-term capital-formation path. Neither the proposal nor the agency's March interpretation is a final market-structure statute.
