SEC Proposes 'Regulation Crypto Assets' Framework
The SEC has proposed a new registration exemption and safe harbor framework for investment contracts involving crypto assets, potentially reshaping US securities regulation for the industry.
The Securities and Exchange Commission has unveiled a significant proposed rulemaking, 'Regulation Crypto Assets,' aimed at creating a tailored regulatory framework for the offer and sale of certain crypto assets. The proposal introduces two new exemptions from the registration requirements of the Securities Act. The first would permit offerings of up to $5 million over a four-year period, while the second would allow offerings up to $75 million in a 12-month period, subject to financial statement and ongoing reporting requirements.
A key feature of the proposal is a novel 'investment contract safe harbor.' This provision would allow an issuer to certify that it has ceased the essential managerial efforts central to the Supreme Court's Howey test. If the conditions are met, the crypto asset would no longer be deemed part of an investment contract and could fall outside the SEC's securities jurisdiction. For the crypto industry and its counsel, this represents a potential path to regulatory clarity and an exit from securities law obligations. The proposal is open for public comment for 60 days following its publication in the Federal Register.