SEC Proposes Regulation Crypto Assets, Offering Clarity to Industry

The Securities and Exchange Commission (SEC) has proposed Regulation Crypto Assets, a regulatory framework for offerings of certain investment contracts involving crypto assets. This proposal is significant for an industry that has sought durable guidance on these issues.

The regulation would establish two new exemptions from the registration requirements of the Securities Act of 1933: the 'Startup Exemption' and the 'Fundraising Exemption'. The Startup Exemption would exempt offerings of up to $5 million during a four-year period, while the Fundraising Exemption would exempt offerings of up to $75 million during each 12-month period.

The proposed regulation also provides a 'conditional safe harbor' from the definition of 'investment contract', and it preempts certain state securities laws that would otherwise apply. This is an effort to provide clarity on issues that have long been uncertain, and it builds on prior work by the Commission and the Crypto Task Force.