SEC Crypto Proposal Offers New Paths for Crypto Asset Issuers

SEC Crypto News: The Securities and Exchange Commission proposed Regulation Crypto Assets, a framework that would allow eligible projects to raise up to $75 million in any 12-month period without registering the offering under the Securities Act. The proposal also includes a conditional safe harbor under which a crypto asset could be deemed not subject to an investment contract if specified conditions are met.

• Fundraising exemption: Up to $75 million per 12-month period, with financial statements and ongoing reporting requirements.
• Startup exemption: Up to $5 million over a four-year period, with principles-based narrative disclosures.
• Investment contract safe harbor: A conditional path under which a crypto asset could be deemed not subject to an investment contract.

The proposal creates two exemptions from the Section 5 registration requirements for certain investment contracts involving crypto assets, which the SEC refers to as covered investment contracts.

The smaller route would cap offerings at $5 million over four years. The larger fundraising exemption would permit offerings of up to $75 million during each 12-month period.

Issuers using either exemption would be required to provide principles-based narrative disclosures and would remain subject to federal antifraud and antimanipulation provisions.

Crucially, issuers using the larger exemption also would be required to provide financial statements and comply with ongoing reporting requirements.

Crypto thought leaders such as Deepankar Kapoor, Chief Growth Officer for Global Markets at compliance-first digital asset marketplace eXchange1, believe the framework could unlock a new phase of positive mature growth for the industry.

“What excites me here isn’t fewer registration headaches for issuers, it’s what it does to the pipeline,” explained Kapoor.

“For years, promising projects either delayed launching or built offshore because the securities question was unresolved.

“A defined $75 million tier with real financial reporting attached means we should see a wave of well-disclosed, legitimate projects come to market over the next year or so.”

Kapoor also shared his expert insight into the best strategy for retail investors looking to get ahead of the SEC’s crypto move.

“The platforms that build out their due diligence bench now, ahead of that wave, are the ones that end up capturing it.”

The headline number draws attention, but the proposal’s safe harbor addresses when a related investment contract could cease to exist.

Under the proposed rule, a crypto asset could be deemed not subject to an investment contract if the issuer certifies to the SEC that it has ceased or terminated all essential managerial efforts it promised to undertake under that investment contract and satisfies the other conditions of the safe harbor.

SEC Chairman Paul Atkins said the proposal is designed for non-security crypto assets that are subject to an investment contract.

In a statement accompanying the release, Atkins said issuers have had to conform to existing SEC rules that were not designed with those assets in mind, and that this approach has impeded capital formation and innovation.

He also said the agency’s past approach had driven investment offshore and limited the protections available to U.S. investors. Atkins credited Commissioner Hester Peirce’s long-standing safe harbor proposal with laying much of the groundwork for Regulation Crypto Assets.

Atkins said legislation remains indispensable for creating rules durable enough to protect the SEC’s work from being undone by a future regulator. He said the SEC will continue to support Congress in delivering the CLARITY Act to President Trump.

The proposed exemptions would establish tailored routes for offerings involving covered investment contracts, while preserving disclosure obligations and the securities laws’ antifraud and antimanipulation provisions.

The fundraising exemption would add financial-condition disclosures, including financial statements that must be audited at certain capital-raising thresholds, according to Atkins’s statement.

The release identifies Regulation Crypto Assets as a proposed rule under File Number S7-2026-27. It states that comments should be received on or before 60 days after publication in the Federal Register.

The SEC provides an online comment process for the file number and says submitted comments will be posted on its website.

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