SEC's New Crypto Rules Could Open A $75M Fundraising Path For Token Projects

The US Securities and Exchange Commission (SEC) on Tuesday proposed the first permanent federal rule for digital asset fundraising. This framework would allow crypto projects to raise up to $75 million without full securities registration.

The proposal, called “Regulation Crypto Assets,” would create two exemptions from the registration requirements of the Securities Act of 1933 for certain investment contracts that involve crypto assets, the SEC announced. A “startup exemption” would allow for one-time offerings up to $5 million over four years, and a “fundraising exemption” would allow offerings up to $75 million in any 12 months.

What The Rules Would Require

Issuers relying on either exemption would have to provide investors with narrative disclosures based on principles. Those using the larger $75 million exemption would also be required to file financial statements and meet ongoing reporting requirements. The proposed rules would override state securities registration and qualification requirements for offerings made in reliance on the new exemptions.

The framework also offers a conditional safe harbor from the definition of “security” under the Securities Act of 1933 and the Securities Exchange Act of 1934. If an issuer has fully developed or permanently discontinued any essential development that it has represented or promised, the underlying crypto asset would no longer be an investment contract, potentially removing it entirely from SEC jurisdiction.