SEC Floats New Token-Offering Regime With $75 Million Annual Exemption

The Securities and Exchange Commission on Aug. 18 unveiled a proposal dubbed Regulation Crypto Assets, aiming to let token issuers raise up to $75 million per year without registering an offering. The draft also introduces a separate safe harbor that, if conditions are met, would take certain tokens outside the definition of a security by treating them as no longer an investment contract. The proposal targets a question that has shaped a decade of SEC crypto enforcement: at what point a token ceases to be a security. It lands as the Digital Asset Market Clarity Act remains short of a floor vote, leaving the agency's rulemaking as the more advanced policy track. Two exemptions, one cap The release outlines a startup exemption allowing up to $5 million to be raised over as long as four years, paired with public filings at the beginning and end of the period. It also proposes a fundraising exemption with two tiers, covering $20 million and $75 million of investment contracts in any 12-month period. Tier 2 issuers would be required to file audited financial statements and comply with ongoing reporting obligations modeled on Regulation A. Both exemptions would rely on principles-based narrative disclosures, while keeping issuers subject to existing securities-law antifraud and antimanipulation provisions. "Regulation Crypto Assets seeks to provide crypto asset entrepreneurs and market participants with clear pathways to raise capital under the federal securities laws," SEC Chairman Paul Atkins said. Safe harbor tied to ending managerial efforts Under the safe harbor, a token would be deemed not to constitute an investment contract once an issuer has completed or permanently ceased all essential managerial efforts promised under the investment contract, makes no new representations about such efforts, and files a public certification supported by analysis. The condition builds on the Commission's March guidance on the application of securities laws to crypto assets. The proposal would preempt state registration requirements for primary offerings made under the regulation, and for secondary transactions by non-issuers, provided the issuer continues to satisfy the federal requirements. Meeting cancelled, clock starts on comments The SEC cancelled an Aug. 14 open meeting that had been scheduled to consider the rules, four days before the proposal was published. The release is numbered 3311434 under file S7202627. Public comments will be due 60 days after publication in the Federal Register. Bitcoin traded at $64,138, up 0.8% on the day, according to CoinGecko. Total crypto market capitalization was $2.29 trillion.