The SEC's first crypto-specific rulemaking creates two registration exemptions and a conditional safe harbor that can sever a token from its investment contract. Comment period is 60 days.
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The SEC on Tuesday proposed Regulation Crypto Assets, the agency's first rulemaking written specifically for crypto asset offerings. The package creates two exemptions from registration under the Securities Act of 1933 and a conditional safe harbor that can sever a token from the investment contract it was sold under.
The proposal landed days after the commission scrapped a Friday meeting called to consider the same text, citing an “unforeseen scheduling issue.” Chair Paul Atkins credited Commissioner Hester Peirce, whose 2020 “Running on Empty” remarks first floated a token safe harbor.
A startup exemption would cover offerings up to $5 million across a four-year window, conditioned on public filings at the start and end of that period plus principles-based narrative disclosures to investors. A fundraising exemption, modeled partly on Regulation A, is two-tiered: $20 million in any 12-month period under Tier 1 and $75 million under Tier 2. Tier 2 requires audited financial statements and ongoing reporting. Antifraud and antimanipulation rules still apply to both. A new definition of “qualified purchaser” would preempt state registration and qualification requirements, including for certain secondary market trades.
The conditional safe harbor is the rule's most novel feature. An issuer that has completed or permanently ceased all essential managerial efforts it promised, and files a certification with supporting analysis, would see the covered investment contract deemed to have ceased to exist. That would take the underlying asset outside the statutory definition of a security. Coinbase chief policy officer Faryar Shirzad described the architecture as both an on-ramp and an off-ramp, arguing that securities law cannot be a one-way door.
The proposal builds on the joint SEC and CFTC interpretation issued March 17, which declared most crypto assets non-securities and introduced a token taxonomy. All three sitting commissioners are Republican. The comment period runs 60 days from Federal Register publication. The commission sent the draft to the White House for interagency review in April.
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