SEC proposes new regulatory framework for crypto asset offerings

The U.S. Securities and Exchange Commission (SEC) has proposed a new regulatory framework for certain crypto asset offerings. The proposal aims to provide tailored regulations for investment contracts involving crypto assets while maintaining existing anti-fraud and anti-manipulation protections.

Key components of the proposal include two new registration exemptions under the Securities Act of 1933. A startup exemption would allow for one-time offerings of up to $5 million over a four-year period. A fundraising exemption would offer a two-tier structure: Tier 1 allows up to $20 million over 12 months, while Tier 2 allows up to $75 million over 12 months, with the latter requiring audited financial statements.

Additionally, the SEC is proposing a conditional safe harbor from the definition of an ‘investment contract.’ This would allow issuers to certify to the SEC that they have terminated essential managerial efforts previously committed to under an investment contract, provided they meet specific conditions. The proposal is not yet effective, and public comments are due by October 20, 2026.