SEC Proposes Framework for Crypto Asset Offerings with Exemptions

The Securities and Exchange Commission (SEC) has proposed a framework for crypto asset offerings that would exempt certain issuers from securities registration requirements.

The proposal, called Regulation Crypto Assets, includes two exemptions: the startup exemption, which would allow issuers to raise up to $5 million over four years without registering their offerings as securities; and the fundraising exemption, which has two tiers with different funding limits, including a maximum of $75 million for Tier 2.

The SEC's approach differs from competing legislative proposals, such as the House-passed Digital Asset Market Clarity Act, on how to determine when disclosure requirements end. The proposal also includes a safe harbor codifying the SEC's March 2026 guidance on when crypto assets issued pursuant to an investment contract separate from that contract.

The SEC emphasized flexibility in its disclosure framework, requiring issuers to describe material information on ten topics without prescribing rigid detail requirements. However, even if the proposed rule is finalized, intermediaries could still face potential liability for listing or trading covered crypto assets before promised managerial efforts conclude.