SEC proposes first crypto offering rules under Regulation Crypto Assets

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.