Key facts
- The SEC has introduced "Regulation Crypto Assets," its first formal crypto rulemaking.
- The proposal offers two paths for selling tokens without SEC registration: one for up to $5 million and another for up to $75 million over 12 months.
- The $75 million tier requires financial statements and ongoing reporting, similar to Reg A+ Tier 2.
- The rules include a safe harbor provision for tokens once issuers complete promised managerial efforts.
- Bitcoin ETFs experienced $189 million in net inflows on Tuesday, with ETH ETFs seeing $71 million in inflows.
The U.S. Securities and Exchange Commission (SEC) has proposed "Regulation Crypto Assets," marking its first formal rulemaking for token fundraising. For a decade, the SEC has regulated crypto fundraising through lawsuits rather than explicit rules. The new proposal aims to provide clarity by establishing two pathways for selling tokens without requiring full SEC registration.
The smaller path allows for a one-time raise of up to $5 million over four years. The larger path permits up to $75 million in sales within any 12-month period, a structure that mirrors the JOBS Act's Reg A+ Tier 2 framework. Both tiers mandate principles-based narrative disclosures, akin to a whitepaper, with the $75 million tier also requiring financial statements and ongoing reporting. Crucially, these rules would preempt state registration requirements for exempt offerings and certain secondary trades.
A significant feature of the proposal is a safe harbor provision. Under this provision, a qualifying token would no longer be considered an investment contract once the issuer has completed or permanently ceased all promised essential managerial efforts. This framework is directly linked to the Token Safe Harbor first proposed by Commissioner Hester Peirce in February 2020, a measure long sought by the industry.
This initiative represents a notable shift from the SEC's previous approach, which often led to the demise of token sales through enforcement actions, such as during the 2017 ICO boom. The lack of clear legal options in the U.S. previously forced projects to adopt structures like offshore entities, sales restricted to non-U.S. buyers, or accredited-only rounds. The introduction of these proposed rules could pave the way for a new wave of initial coin offerings (ICOs) within the United States.
In broader market news, crypto majors were trading in positive territory, with Solana (SOL) leading gains. Bitcoin (BTC) was up 0.5% at $64.4k, and Ethereum (ETH) was up 1% at $1,920. Bitcoin ETFs saw $189 million in net inflows on Tuesday, while Ethereum ETFs attracted $71 million. Separately, Robinhood CEO Vlad Tenev urged U.S. policymakers to modernize securities rules to allow tokenized stocks to trade domestically. Citi announced plans to launch Bitcoin custody services for its institutional clients later this year.