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SEC proposes rules for token offerings, with $75 million exemption
The SEC also created a safe harbor that could remove some tokens from the definition of a security after an issuer stops the essential managerial efforts it promised investors.
The Securities and Exchange Commission proposed a new regulatory framework for crypto tokens on Aug. 18, aiming to clarify when token offerings can be raised without registration under federal securities laws. The plan would allow token issuers to raise up to $75 million a year without registering the offering, with additional safe-harbor conditions that could take some tokens outside the definition of a security.
Under the proposal, a startup exemption would cover up to $5 million raised over as long as four years, requiring public filings at the start and end of the period. A separate fundraising exemption is split into two tiers, allowing $20 million or up to $75 million of covered investment contracts per 12-month period, with Tier 2 issuers required to file audited financial statements and meet ongoing reporting obligations modeled on Regulation A.
The SEC said the safe harbor would apply once an issuer has completed or permanently ceased the essential managerial efforts it promised investors, makes no new representations about those efforts, and files a public certification with supporting analysis. Even if a token is removed from the investment contract definition, issuers would remain subject to antifraud and antimanipulation provisions, and the proposal would preempt certain state registration requirements for qualifying primary offerings and some secondary transactions by non-issuers.
The SEC framed the proposal as an effort to provide clearer pathways for capital raising and said it was released after a scheduled Aug. 14 open meeting was cancelled. The rulemaking is part of SEC activity numbered 33-11434 under file S7-2026-27, with public comments due 60 days after Federal Register publication, while Bitcoin last traded around $64,138, up 0.8% on the day, and total crypto market capitalization was about $2.29 trillion.
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