SEC Proposes Regulation Crypto Assets, Allowing Up to $75 Million in Token Funding
The Securities and Exchange Commission (SEC) has proposed a new regulation that would allow crypto projects to raise up to $75 million before ending their token's securities contract. The proposal, Regulation Crypto Assets, aims to provide a clear path for projects to fund their development while ensuring compliance with federal securities law.
The SEC recognizes that many crypto projects start with a promise of future utility, and buyers provide capital to help the team build the network. However, this arrangement can be considered an investment contract under federal securities law. Regulation Crypto Assets seeks to cover this bargain from start to finish, creating routes for projects to raise funds while minimizing regulatory hurdles.
The proposal divides token financing into three lanes: a startup exemption and two larger fundraising exemptions with tiers. The startup exemption allows for up to $5 million in funding across a single period lasting up to four years. The two larger tiers, Tier 1 and Tier 2, permit up to $20 million and $75 million respectively, with stricter eligibility rules and disclosures.