US SEC Proposes New Crypto Regulation Framework for US Token Fundraising

Key Insights:

• A proposed cryptocurrency regulation establishes two pathways for specific token investment contracts.
• Startup creators may collect up to $5 million total across a four-year timespan.
• Larger qualifying issuances can reach a maximum of $75 million during any 12-month window.

The US SEC has proposed a regulatory structure for fundraising associated with specific digital assets. Named Regulation Crypto Assets, this initiative introduces two registration exemptions pursuant to the Securities Act of 1933. One pathway addresses startup offerings capped at $5 million over four years, while the second permits qualifying issuers to secure up to $75 million every 12 months.

Additionally, the blueprint establishes a conditional safe harbor once an issuer finalizes or permanently concludes promised management activities. This crypto news highlights an active proposal rather than a finalized rule. The public is invited to submit feedback on all provisions throughout a 60-day period following its publication in the Federal Register.

Crypto Regulation Proposal Creates Two Funding Routes

The startup exemption remains available for one-time use, restricting sales to $5 million over a four-year period. Issuers are required to file formal notices when initiating and exiting this window. Furthermore, they must supply investors with principles-based narrative disclosures while utilizing the exemption.

This element of the regulatory strategy grants temporary relief from full Securities Act registration requirements. Federal antifraud and antimanipulation mandates remain fully applicable, meaning the exemption does not absolve issuers of their legal responsibilities to investors.

The alternative fundraising exemption focuses on larger offerings, drawing inspiration from aspects of Regulation A. According to the SEC fact sheet, Tier 1 sets an annual threshold of $20 million, whereas Tier 2 expands that limit to $75 million within the same timeframe. Both avenues apply strictly to covered investment contracts rather than every individual token sale or crypto asset.

The complete proposal details plans to adjust these funding ceilings for inflation over time. These modifications will happen automatically without requiring separate notice-and-comment rulemaking for each adjustment, ensuring financial limits keep pace with economic changes.

Disclosure Duties Increase for Larger Token Offerings

Organizers leveraging the larger exemption must make their offering documents publicly available. These files must incorporate narrative disclosures, descriptions of financial status, and official financial statements, with Tier 2 statements mandating an independent audit.

The US SEC will also mandate regular reporting from entities utilizing these exemptions. While these obligations mirror elements of Regulation A, they are tailored specifically for covered investment contracts. Consequently, this crypto news emphasizes conditional funding avenues rather than unconditional access to public markets.

The text also tackles state-level registration regulations. It classifies eligible purchasers under Regulation Crypto Assets as qualified buyers under federal law. This designation effectively preempts state registration and qualification mandates for qualifying offers and transactions.

Certain secondary trades may qualify for similar treatment, provided the issuer remains current on all mandatory filing, disclosure, and periodic reporting obligations. All other federal protective laws continue to regulate behavior under either exemption.

Crypto Regulation Safe Harbor Defines an Issuer Exit

The safe harbor provision outlines a crypto asset’s legal standing after scheduled development initiatives conclude. Issuers are obligated to finish or permanently halt all core managerial duties promised to investors, and they are prohibited from making new commitments to perform such labor for that asset.

Following this, the issuer must provide a public certification accompanied by supporting analysis. If all criteria are satisfied, the covered investment contract is considered terminated, freeing the underlying crypto asset from that contract under two federal securities laws.

This portion of the crypto regulation framework expands upon a March interpretation issued jointly by the SEC and CFTC. That guidance details how non-security digital assets can transition into or out of investment contracts, while also addressing airdrops, protocol mining, staking, and wrapped assets.

The US SEC published the initiative on August 18. The feedback window for the crypto rules remains open for 60 days following its Federal Register release. Stakeholders may comment on financial thresholds, disclosure requirements, the safe harbor, and proposed state preemption rules by referencing file S7-2026-27.

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