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SEC Tailors Crypto Rules: $75M Exemption, State Preemption
SEC's crypto proposal: $75M exemption, a safe harbor for mature tokens, and state-law preemption. Final rule could shift.
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The SEC is rewriting the rulebook for crypto fundraising. The agency's proposed Regulation Crypto Assets includes two new securities-exemption tiers, a conditional safe harbor that could eventually uncouple some tokens from investment-contract status, and a state-law preemption provision aimed at the patchwork of blue-sky rules that has pushed projects offshore.
One exemption lets an issuer raise up to $5 million over four years. The bigger one, $75 million in any 12-month period, carries ongoing reporting obligations and financial-statement requirements. Both apply to investment contracts involving crypto assets, not to the assets themselves.
The safe harbor is the structural novelty. Once an issuer has completed or permanently stopped the essential managerial efforts it promised under the investment contract, the token could fall outside the definition of an investment contract entirely -- provided other conditions are met. That is a path to treating a mature, sufficiently decentralized network as a different legal object from a pre-functional protocol.