SEC Proposes Rules Allowing Token Issuers to Raise Up to $75 Million Without Registration

The US Securities and Exchange Commission (SEC) has proposed rules for token offerings that would exempt issuers from registering certain transactions. The proposal, which was voted on by all three sitting commissioners without dissent, aims to provide clarity on when a token stops being a security.

Under the proposed Regulation Crypto Assets, issuers could raise up to $75 million per year without registering the offering. The rule would also create two exemptions for startups and fundraising efforts, both of which require financial statements and ongoing reporting obligations.

The safe harbor provision in the proposal would allow tokens to be removed from the definition of a security once an issuer has completed or permanently ceased all essential managerial efforts represented under the token. This provision applies regardless of whether the project is decentralized or centralized.