The U.S. Securities and Exchange Commission (SEC) has introduced its first major crypto regulatory proposal under Chairman Paul Atkins. Known as Regulation Crypto Assets, the proposal aims to
The U.S. Securities and Exchange Commission (SEC) has introduced its first major crypto regulatory proposal under Chairman Paul Atkins. Known as Regulation Crypto Assets, the proposal aims to provide a clearer framework for crypto companies and market participants operating under federal securities laws.
The proposal includes several exemptions that could give crypto companies clearer routes to offer digital assets and raise capital. The move is part of the SEC's broader effort to develop rules that better reflect the structure and characteristics of the crypto industry.
Atkins said the package is designed to support capital formation while giving crypto innovation more room to develop. The proposal comes as Congress has yet to finalize legislation that would establish a broader framework for the digital asset market.
The SEC proposal includes two pathways with different limits and requirements. The first would allow companies to offer up to $5 million over a four-year period, subject to certain disclosure requirements for investors.
The second pathway would cover offerings of up to $75 million over a one-year period, but would come with stricter requirements. Companies using this pathway would have to disclose their financial condition and meet ongoing reporting obligations.
Issuers under both pathways would still be required to provide certain information to investors. Offerings under the second pathway would also remain subject to securities laws covering fraud and market manipulation.
The proposal also addresses circumstances in which a crypto asset may no longer be treated as an investment contract under securities laws.
The SEC proposes a safe harbor once an issuer has completed or permanently ceased the essential managerial efforts it previously represented or promised to undertake under an investment contract. Under the proposal, certain crypto assets could gain greater clarity over their regulatory status once those obligations have been fulfilled.
Regulation Crypto Assets remains a proposal and is not yet a final rule. The SEC will accept public and industry comments for 60 days before reviewing the feedback and determining its next steps.
The SEC proposal comes as the Senate continues efforts to advance the Digital Asset Market Clarity Act, which would establish a broader legal framework for the digital asset market.
Atkins said legislation from Congress remains necessary to create durable rules for the crypto industry. Industry groups have welcomed the SEC proposal, noting that the agency incorporated several recommendations from crypto companies into the proposed framework.
If finalized, Regulation Crypto Assets could provide crypto companies with a more structured path to offer digital assets within the securities framework. For now, the proposal remains subject to public comments and further review by the SEC.
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