SEC proposes 'Regulation Crypto Assets' to clarify fundraising rules for crypto firms

The US Securities and Exchange Commission (SEC) on Tuesday proposed "Regulation Crypto Assets," a new regulatory framework for certain crypto asset investment contracts.

The proposal outlines exemptions that would allow eligible issuers to raise capital without registering offerings under the Securities Act. The move builds on the SEC’s earlier March interpretation of how federal securities laws apply to crypto assets and related transactions.

With the proposal, the agency aims to establish a framework tailored for certain crypto-related offerings while maintaining disclosure and investor protection requirements.

“As we continue the Commission’s efforts to provide clarity for crypto markets, and as Congress works to establish a lasting regulatory framework, Regulation Crypto Assets seeks to provide crypto asset entrepreneurs and market participants with clear pathways to raise capital under the federal securities laws,” said SEC Chairman Paul Atkins.

SEC outlines two exemptions for crypto fundraising

The proposal includes two exemptions from the Securities Act of 1933 registration requirements for qualifying crypto-related investment contracts. The first would provide a one-time exemption for offerings of up to $5 million over a four-year period. The second would allow issuers to conduct offerings of up to $75 million during any 12-month period.

Issuers relying on either exemption would be required to provide investors with principles-based narrative disclosures. Those using the larger $75 million exemption would face additional requirements, including financial statements and ongoing reporting.

The proposal would also establish a conditional safe harbor from the term investment contract in the definitions of security under both the Securities Act and the Securities Exchange Act of 1934.

Under the proposed safe harbor, a crypto asset would not be treated as subject to an investment contract for purposes of those laws if the specified conditions are satisfied.

The SEC also proposed preempting state securities law registration and qualification requirements for offerings conducted under the new exemptions, as well as certain secondary-market transactions.

The agency noted that the framework is intended to provide greater clarity around when crypto assets and related transactions fall under federal securities laws. It also shared that the proposal could reduce incentives for issuers to operate outside the US while giving investors access to crypto-related offerings under a more consistent regulatory framework.

The SEC will accept public comments for 60 days after it publishes the proposed release in the Federal Register.

The proposal comes as US regulators continue to develop rules governing digital assets. The SEC and Commodity Futures Trading Commission (CFTC) have been working on broader efforts to clarify regulatory responsibilities and establish a more defined framework for crypto markets.

CFTC Chairman Mike Selig said the agency would prioritize fostering innovation in emerging technologies, including blockchain, AI and prediction markets.

“POTUS put together a dream team with one goal in mind, shepherd America towards the new frontier of finance,” Selig said in an X post on Tuesday.

He added that the CFTC’s Innovation Advisory Committee will hold its inaugural meeting on Thursday, bringing together industry participants and other stakeholders in Washington to discuss the sector's development.