SEC Proposes Crypto Rules to Ease US Investment Contracts

The US Securities and Exchange Commission (SEC) has proposed new rules for crypto assets, aiming to create a clear framework for certain investment contracts involving digital tokens. The proposal, titled 'Regulation Crypto Assets,' would establish two exemptions from Securities Act registration: one covering raises of up to $5 million across four years and the other allowing up to $75 million every 12 months.

Token issuers using these exemptions must provide plain narrative disclosures for investors and publish financial statements. The larger exemption also requires ongoing reports and federal rules would override state registration requirements for these offerings and certain secondary trades.

The proposed safe harbor, building on the joint token taxonomy issued by the SEC and the Commodity Futures Trading Commission (CFTC) in March, would allow issuers to exit securities treatment once they complete or permanently cease all essential managerial efforts promised under an investment contract. This development comes after a long court fight between the SEC and Ripple over XRP's status as a security.

The new rules have been met with little immediate market reaction, but attention now turns to the comment window and Congress, where the CLARITY Act, a bill setting market structure rules for digital assets, still awaits a Senate vote. The final conditions of the safe harbor will determine whether issuers that built offshore actually bring token sales back to the US.