SEC Proposes New Crypto Framework to Clarify Token Fundraising Rules
Key Takeaways
- •The SEC's proposal marks a departure from its previous reliance on enforcement actions to police token sales, an approach the industry widely criticized as regulation by enforcement.
- •The framework would create tiered exemptions allowing smaller issuers to raise up to $5 million over four years, while larger companies could raise up to $75 million in a 12-month period subject to financial disclosure and reporting requirements.
- •A proposed safe harbor could prevent qualifying crypto assets from being classified as investment contracts under the Supreme Court's 1946 Howey test.
- •The tiered structure mirrors the SEC's existing Regulation A+ exemption, which also permits raises of up to $75 million over 12 months, but would be tailored specifically to token offerings.
- •The public comment window lasts 60 days after Federal Register publication, after which commissioners will review feedback before voting on whether to adopt final rules, though concerns remain that future administrations could reverse the approach.
The U.S. Securities and Exchange Commission (SEC) has proposed a crypto framework that could reshape fundraising across America's digital asset industry, marking a significant policy shift under President Donald Trump's administration. The proposal seeks to create clearer routes for crypto businesses to raise capital without triggering traditional securities requirements. It marks a departure from previous years, when the SEC relied primarily on enforcement actions rather than tailored rulemaking to police token sales — an approach the industry widely criticized as "regulation by enforcement."
New Fundraising Pathways
Under the framework, the SEC would create exemptions covering token offerings of different sizes. Smaller issuers could receive a one-time exemption covering up to $5 million raised over four years. Larger companies could offer as much as $75 million during a 12-month period, though those issuers would still face financial disclosure and reporting requirements. The tiered structure echoes the SEC's existing capital-raising exemptions — Regulation A+ also permits raises of up to $75 million over 12 months — but would be tailored specifically to token offerings.
Safe Harbor Provision
The SEC also proposed a safe harbor for certain crypto assets. The provision could prevent qualifying tokens from being classified as investment contracts. That classification question has long been central to U.S. crypto regulation: under the Supreme Court's 1946 Howey test, an asset sold with a reasonable expectation of profit derived from the efforts of others can be deemed a security, and the SEC has applied that standard to numerous token projects in past enforcement actions.
Industry Response and Next Steps
The proposal follows years of pressure from crypto companies seeking clearer U.S. rules. The framework could encourage more blockchain businesses to operate domestically and may reduce uncertainty surrounding token launches and capital formation.
The proposal arrives after Congress stalled broader crypto legislation. However, concerns remain that future administrations could reverse the SEC's approach.
The agency will accept public comments for 60 days after publication in the Federal Register. Under standard SEC rulemaking procedure, commissioners would then review the submitted feedback before voting on whether to adopt final rules.
Source: CryptoNewsNet
