SEC Proposes Crypto Regulation Exemptions for Small Issuers

The Securities and Exchange Commission has proposed exemptions for certain digital asset offerings from securities registration statements. This move is part of the regulator's plans to address crypto regulation after a landmark legislation stalled in Congress.

Under the proposal, issuers with offerings up to $5 million would be exempted for four years, while those with offerings up to $75 million would be exempt for 12 months. Issuers under the second exemption would need to provide financial statements and meet ongoing reporting requirements.

SEC Chairman Paul Atkins said in a statement that the exemptions are meant to help companies at the startup and fundraising stages of their growth, adding that it's 'the commission's answer to the question that has puzzled innovators since the birth of the blockchain: how can I raise capital to develop a crypto asset while I am still working to develop the network where it will be used.'

The proposed rule would also grant a safe harbor from the definition of 'investment contract' under the securities laws once issuers have completed or ceased all essential managerial efforts that they promised to investors.