SEC Publishes Proposed Crypto Regulation Framework with $5M and $75M Exemptions

The US Securities and Exchange Commission (SEC) has published its proposed 'Regulation Crypto Assets' framework in the Federal Register, starting a 60-day public comment period. The proposal includes possible exemptions for covered digital asset investment contracts, such as a one-time startup exemption of up to $5 million and a 12-month fundraising exemption of up to $75 million.

The publication marks an important step towards formalizing crypto regulations in the US. Issuers, exchanges, developers, investors, academics, trade groups, lawyers, and consumer advocates can now respond to the proposal during the comment period, which ends on October 20.

Regulators have been struggling with how to classify tokens as securities or commodities, and the proposed framework aims to create a clearer path for token fundraising in the US. The conditional safe harbor concept included in the proposal could allow certain tokens to cease being treated as investment contracts if the issuer certifies that managerial efforts have been completed or discontinued.

However, it's essential to note that the rules are not final and should not be interpreted as a green light for token fundraising. The SEC has not approved token fundraising generally, and issuers cannot assume that a future exemption will protect current activity.