SEC Proposal Aims to Reopen Path for Incubating New Crypto Assets

The US Securities and Exchange Commission (SEC) has released a proposal for regulating crypto assets. The regulation, called Regulation Crypto Assets, sets out specific rules for how crypto projects can raise funds, grow from zero to one, and transition beyond securities regulation.

At the heart of the proposal are two exemptions: the startup exemption and the fundraising exemption. The startup exemption allows projects to raise up to $5 million over a four-year period with minimal disclosure requirements. The fundraising exemption has two tiers: Tier 1 allows up to $20 million in 12 months, while Tier 2 allows up to $75 million within the same timeframe.

Once a project completes its core managerial efforts and no longer makes new promises, it may file Form TR with the SEC to have its investment contract extinguished. This would allow the token to transition from a fundraising instrument to a freely tradable commodity.

The proposal is seen as an attempt to reopen the path for incubating new assets in the crypto industry, which has struggled to create high-quality native assets since the collapse of FTX in 2022.