SEC, Senate Crypto Proposals Diverge on Fundraising Limits

The US Securities and Exchange Commission (SEC) has proposed Regulation Crypto Assets, which would allow for up to $75 million in fundraising over a 12-month period. However, this proposal is not identical to a Senate framework that offers a greater-of-$50-million-or-10% formula.

Under the SEC's proposal, issuers could choose from two routes: a limited 'startup' exemption allowing for up to $5 million over four years or a separate offering-and-reporting exemption permitting up to $75 million in 12 months with disclosure and continuing-reporting duties.

The Senate framework takes a different approach by exempting qualifying transactions in 'ancillary assets' sold under an investment contract. The annual amount would be the greater of $50 million or 10% of the total dollar value of the issuer's outstanding ancillary assets, measured during a four-year period.

Issuers and investors should note that the practical choice between these two routes turns on more than just the amount an issuer wants to raise. They must first identify the asset, transaction, issuer eligibility, and any affiliate or control relationships.