SEC Proposes Regulation Crypto Assets with Two New Exemptions

The Securities and Exchange Commission (SEC) has proposed Regulation Crypto Assets, which aims to establish a regulatory framework for offerings of certain investment contracts involving crypto assets. This proposal represents a significant development in an industry that has sought durable, fit-for-purpose guidance on these issues for years.

The regulation would provide 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 regulation also provides a 'conditional safe harbor' from the definition of 'investment contract', and it preempts certain state securities laws that would otherwise apply to offerings of Covered Investment Contracts. The proposal is open for public comment until October 20, 2026.