SEC Proposes Regulation Crypto Assets with Potential Private Litigation Risks
The Securities and Exchange Commission (SEC) has proposed Regulation Crypto Assets, which aims to provide clarity on when investment contracts involving crypto assets are not considered securities.
The proposal includes two fundraising pathways: a one-time startup exemption for up to $5 million in aggregate over four years, and exemptions for Tier 1 offerings of up to $20 million and Tier 2 offerings of up to $75 million within a 12-month period.
However, the required transition report could create opportunities for private securities litigation. Purchasers of crypto assets post-transition report filing may potentially bring suit alleging that their purchases were part of an unregistered offer and sale of securities under Section 12(a)(1) of the Securities Act of 1933.