SEC Surpasses Stalled Crypto Bill with Own Rulemaking Proposal
The US Securities and Exchange Commission (SEC) has taken an unprecedented step in regulating cryptocurrencies by bypassing its own public meeting schedule to release a formal rulemaking proposal for crypto assets. The agency's move, dubbed Regulation Crypto Assets, creates permanent offering exemptions and a safe harbor from security classification.
The proposal marks a shift from the SEC's previous approach of operating under staff statements and enforcement actions, which were often subject to change with new administrations. This new framework attempts to codify a unilateral framework for crypto assets through formal notice-and-comment rulemaking.
Under this plan, smaller projects would be exempt from Section 5 of the Securities Act of 1933, allowing them to raise up to $5 million over four years if they meet specific public filing and disclosure requirements. Larger projects could fundraise up to $75 million per year for 12 months, contingent upon financial statements and ongoing narrative disclosures.
The most significant aspect of the proposal is the Conditional Investment Contract Safe Harbor, which provides an exit ramp by deeming assets no longer securities once essential managerial efforts are completed or ceased. This mechanism has been long sought by the industry but creates tension between the exit ramp's promise and the Commission's authority.