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SEC proposes crypto exemptions for raising up to $75 million
The SEC’s proposed Regulation Crypto Assets would also set a process to end an investment contract after promised network work is completed or permanently stopped.
The U.S. Securities and Exchange Commission has proposed a framework, called Regulation Crypto Assets, aimed at clarifying how crypto projects can raise capital tied to promises about building and using a network, according to CryptoSlate. The proposal would create routes for projects to raise up to $75 million under crypto specific rules.
The SEC’s approach is built around the idea that financing a token project can be an investment contract under federal securities law when buyers fund a team’s essential managerial work. Once the issuer has completed that work or permanently stopped trying to fulfill its promises, the SEC says the investment contract could cease to exist.
Under the proposal, Rule 400 would establish a safe harbor that allows later token transfers to be treated separately from the original fundraising transaction, using a public filing and a written explanation from the issuer. The safe harbor would be available to any qualifying issuer, even if the project raised capital through other exemptions or structures.
The SEC published the proposal in the Federal Register on Aug. 21, with comments due Oct. 20. The commission would then need to review submissions and vote on a final rule before projects could use the new exemptions.