SEC Proposes Regulations to Help Crypto Projects Grow Without Securities Law Jurisdiction

The SEC has proposed new regulations aimed at helping crypto projects navigate fundraising and growth without falling under securities law jurisdiction.

The proposal, called Regulation Crypto Assets, outlines two exemptions and one safe harbor for projects to raise funds and grow from zero to one. The startup exemption allows projects to raise up to $5 million within a four-year period, while the fundraising exemption has two tiers: Tier 1 allows for up to $20 million in 12 months, and Tier 2 allows for up to $75 million in 12 months.

The proposal also includes an investment contract safe harbor, which allows projects to exit securities law jurisdiction once they meet certain conditions. The design logic behind the startup exemption is to give project teams a regulatory buffer period to complete development work promised in their whitepaper.