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SEC Proposes Crypto Rules: $5M and $75M Exemptions
SEC proposed Regulation Crypto Assets, creating two exemptions for crypto offerings up to $5M and $75M, preempting state securities laws. 60-day comment period.
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The Securities and Exchange Commission proposed a new rule framework for digital asset offerings Tuesday, creating two registration exemptions that would preempt state securities laws. Regulation Crypto Assets, or Reg CA, would allow issuers to raise up to $5 million under a one-time startup exemption and up to $75 million annually under a fundraising exemption, the agency said.
The startup exemption covers offerings of up to $5 million. It is available once over a four-year period. Issuers must make principles-based disclosures.
The fundraising exemption has two tiers. Tier 1 permits offerings up to $20 million in a 12-month period. Tier 2 allows up to $75 million in a 12-month period but requires audited financial statements and ongoing reporting, the SEC said.
The rules define a "qualified purchaser" for covered investment contracts. That definition preempts state securities registration and qualification requirements for offers and sales. States have challenged similar preemption in the past, losing a lawsuit over Regulation A+. They can still pursue fraud actions, the SEC noted.