SEC Proposes New Crypto Regulation Framework for Token Fundraising

The US Securities and Exchange Commission (SEC) has proposed a new framework for regulating token fundraising in the crypto space. The proposal, which would create two registration exemptions under the Securities Act of 1933, aims to provide temporary relief from full registration requirements for certain issuers.

The first exemption would allow startup issuers to raise up to $5 million across a four-year period, with a one-time notice filing requirement. The second exemption would permit larger qualifying issuers to raise up to $75 million within each 12-month period, with ongoing disclosure and reporting requirements.

The proposal also introduces a conditional safe harbor for issuers that complete or permanently end promised managerial work on a crypto asset. This safe harbor would deem the covered investment contract to have ended, allowing the underlying asset to be removed from its investment contract status under two federal securities statutes.