The U.S. Securities and Exchange Commission has proposed Regulation Crypto Assets, a 402-page rulemaking that would create a dedicated framework for offerings tied to crypto asset investment contracts. The proposal would introduce two exemptions from Securities Act registration and a conditional safe harbor that could allow some qualifying tokens to stop being treated as investment contracts.

The draft is aimed at the fundraising stage for crypto projects rather than the broader market structure around digital assets. Public comments will be accepted for 60 days after the proposal is published in the Federal Register, and the text could still be revised in response to feedback or political changes.

Two fundraising paths under the proposal

The proposal sets out a startup exemption for offerings of up to $5 million over four years. Under that path, issuers would provide plain-language, principle-based disclosures and would not be required to supply audited financial statements.

A second exemption is designed for larger capital raises. It would allow offerings of up to $75 million in any rolling 12-month period, split into two tiers: up to $20 million annually without audited financials, and up to $75 million if the issuer provides audited financials and ongoing reporting.

Who the exemptions would cover

Both exemptions would be limited to issuers of what the SEC describes as covered investment contracts involving crypto assets. The framework does not extend to tokens that have already been treated as commodities, with the source article naming Bitcoin, Ethereum, XRP, and Solana as examples excluded from these exemptions.

If adopted, offerings made under either exemption would receive federal preemption from state securities laws. That would reduce, but not fully remove, the role of state-level oversight.

Safe harbor for losing the investment contract label

A central feature of the proposal is a conditional safe harbor that could let a crypto asset exit the investment contract category. According to the framework, that would happen only after the issuer has permanently stopped the essential managerial efforts it previously said it would undertake.

That concept may give projects a rule-based path away from securities treatment, but the proposal also raises unresolved questions. Among them are how an issuer would prove that those efforts have truly ceased, how much the SEC would rely on self-certification, and how such claims could be enforced in practice.

What the rule does not settle

Regulation Crypto Assets is focused narrowly on the offering process. It does not attempt to resolve other major crypto regulatory issues such as secondary trading, exchange registration, custody arrangements, or market surveillance.

The source article also notes that the proposal leaves gaps for decentralized finance and other models that do not fit neatly into a traditional issuer-led framework. That means a large part of the digital asset market would still depend on future SEC action or separate legislation.

How it compares with other proposals

The article contrasts the SEC plan with the CLARITY Act, which takes a different approach. That bill uses a four-part test for what it calls a mature blockchain and includes a 20% ownership cap, potentially shifting some tokens toward oversight by the Commodity Futures Trading Commission rather than treatment as SEC-regulated securities.

For now, the next confirmed step is the public comment period, which will remain open for 60 days after Federal Register publication. After that, the SEC could revise the proposal, advance it in a new form, or revisit it depending on the feedback it receives and broader political developments.

Source: crypto.news