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SEC crypto proposal would let insiders sell immediately after token buys
The SEC plan would treat tokens as freely tradable as soon as acquisition occurs, unless an issuer or other law restricts insiders.
CryptoSlate reports that the SEC’s new crypto fundraising proposal would treat tokens as free to trade immediately once a buyer acquires them, unless the issuer or another applicable law says otherwise.
The SEC argues this framework would avoid assuming a mandatory insider lockup at issuance, while also discussing the information gap between insiders and token buyers during a project’s development. The proposal would ask commenters whether to require insiders to hold tokens for a one year period before any final rule is adopted, even though it does not include a minimum holding period.
A separate July 22 Senate draft, known as CLARITY, would require insiders to hold a covered token for at least 12 months before a control test is cleared, with an additional six month holding period after network certification. CryptoSlate says the Senate bill would still cap insider selling, but it would enforce holding periods that the SEC proposal does not.
Even without a mandatory one year holding requirement, the SEC proposal would still cap how much insiders can sell in qualified offerings. CryptoSlate notes that under Tier 2 a qualified offering can raise up to $75.0 million in a year, with $22.5 million available from affiliate contributions, and that a first year cap limits insiders’ sales to 30% of the total raise. It also says timing is left as the key difference, since an insider could sell as soon as the token stops counting as a restricted security.