SEC Proposes Crypto Regulation Exemptions

(Bloomberg) -- The Securities and Exchange Commission unveiled a proposal to exempt certain digital asset offerings from securities registration statements, as the regulator moves ahead with crypto plans after landmark legislation stalled in Congress.

Offerings up to $5 million would be exempted for four years and offerings up to $75 million would be exempt for 12 months, according to an agency release. Issuers under the second exemption would be required to provide financial statements and meet ongoing reporting requirements, according to the more than 400-page proposed rule.

The proposal is “the commission’s answer to the question that has puzzled innovators since the birth of the blockchain: how can I raise capital to develop a crypto asset while I am still working to develop the network where it will be used,” SEC Chairman Paul Atkins said in a post on X.

The agency said exemptions are meant to help companies at the startup and at the fundraising stages of their growth.

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The proposed rule would also grant a safe harbor from the definition of “investment contract” under the securities laws once issuers have completed or ceased all essential managerial efforts that it promised to investors. That provision could make it easier for a digital asset to fall under the purview of the Commodity Futures Trading Commission.