The Securities and Exchange Commission proposed Regulation Crypto Assets on Aug. 18, a framework that would let token issuers raise up to $75 million a year without registering the offering and, under a separate safe harbor, remove some tokens from the definition of a security altogether.
The proposal answers the question at the center of a decade of SEC crypto enforcement: when a token stops being a security. It arrives with the Digital Asset Market Clarity Act still short of a floor vote, making the rulemaking the more advanced of the two tracks.
The proposing release creates a startup exemption and a fundraising exemption, both covering what it calls "covered investment contracts" — investment contracts whose only subject is a crypto asset that is not itself a security. The release defines a crypto asset as "any digital representation of value that is recorded on a cryptographically-secured distributed ledger."
The startup exemption allows up to $5 million raised over a period of as long as four years, with public filings at the beginning and end of that period.
The fundraising exemption runs on two tiers: up to $20 million of covered investment contracts in a 12-month period under Tier 1, and up to $75 million under Tier 2.
