The proposal, called “Regulation Crypto Assets”, aims to create a tailored securities offering regime for certain investment contracts involving crypto assets.
The SEC said the framework is designed to provide clearer routes for crypto companies to raise capital while retaining investor protections under US securities laws.
What has the SEC proposed?
The proposal includes two exemptions from the registration requirements under the Securities Act of 1933.
The first would provide a one-time exemption for offerings of up to $5 million over a four-year period.
The second would allow offerings of up to $75 million in any 12-month period.
These exemptions would not mean that issuers can raise money without providing information to investors.
Under both routes, issuers would have to provide certain principles-based narrative disclosures to investors. Companies using the larger $75 million exemption would also have to provide financial statements and comply with ongoing reporting requirements.
What is the safe harbour?
The SEC has also proposed a conditional safe harbour for certain crypto assets.
Under the proposal, a crypto asset could be excluded from the definition of an “investment contract”, and therefore from being treated as a security under the relevant federal securities laws, if the specified conditions are met.
The proposal also includes a provision that would preempt certain state securities-law registration and qualification requirements for securities issued under the proposed exemptions.
Why is this important for crypto companies?
Crypto companies have long argued that many digital tokens do not fit neatly within the traditional securities framework.
The industry has pushed for rules specifically designed for crypto assets rather than applying securities regulations developed for conventional financial instruments.
The SEC’s proposal could make it easier for eligible crypto businesses to raise capital in the US while giving them a clearer understanding of the regulatory requirements they must meet.
SEC Chairman Paul Atkins said the proposal seeks to provide crypto entrepreneurs and market participants with clearer ways to raise capital under federal securities laws.
Does the proposal mean crypto will no longer be regulated as securities?
No.
The proposal does not remove crypto assets from the securities framework altogether.
Instead, it creates specific exemptions and a conditional safe harbour for certain crypto-related investment contracts. Issuers using the proposed exemptions would still have disclosure obligations, while those using the larger exemption would face financial statement and continuing reporting requirements.
Whether a particular crypto asset or offering qualifies would depend on the conditions set out in the proposed rules.
Why is the SEC changing its approach?
The proposal comes as the Trump administration has sought to establish a more crypto-friendly regulatory environment in the US.
The SEC has already moved away from several enforcement and accounting policies that had faced strong criticism from the crypto industry.
At the same time, broader legislation to establish a long-term regulatory framework for digital assets has faced delays in Congress.
The SEC’s proposal therefore provides a regulatory route in the near term, but it is not the same as a law passed by Congress.
What does this mean for investors?
For investors, the proposal could bring greater clarity about how certain crypto offerings can raise money and what information issuers must provide.
The SEC said its approach is intended to expand investment opportunities while maintaining stronger and more consistent investor protections.
However, an exemption from securities registration does not eliminate investment risk. Crypto assets can remain highly volatile, and the proposed framework does not guarantee the value or performance of any token.
What happens next?
The proposal is not yet final.
The SEC will accept public comments for 60 days after the proposal is published in the Federal Register. The agency will then consider the feedback before deciding whether to adopt the rules, modify them or take another course.
-With Reuters inputs
