SEC’s proposed crypto rules could revive public token sales, but legal grey areas remain
The SEC’s proposed “Regulation Crypto Assets” framework could make public token fundraising significantly easier in the U.S., potentially allowing qualifying projects to raise up to $75 million every 12 months.
The proposal creates two exemptions: a one-time pathway allowing startups to raise up to $5 million over four years, and a broader exemption permitting offerings of up to $75 million in each 12-month period. Projects could potentially conduct repeated $75 million raises, provided each is treated as a distinct offering and receives the required SEC review.
The structure could increase demand for early-round allocations if investors expect later fundraising rounds to occur at higher valuations. However, non-accredited investors would generally be limited to investing 10% of the greater of their income or net worth, reducing the possibility of 2017-style speculative excess.
Experts say the framework is unlikely to trigger another ICO boom because issuers would face disclosure, reporting and regulatory requirements, while investor appetite has also been shaped by the high failure rate of earlier ICO projects.
A major uncertainty remains around secondary trading. Even if a token itself is not considered a security, transactions involving it could potentially constitute securities transactions if buyers reasonably expect profits based on the issuer’s continuing managerial efforts.
Legal experts warn this could leave some tokens in a regulatory grey zone between securities and non-securities, creating potential risks for issuers, exchanges and retail investors despite the clearer fundraising framework.
The SEC’s proposed “Regulation Crypto Assets” framework could make public token fundraising significantly easier in the U.S., potentially allowing qualifying projects to raise up to $75 million every 12 months.
The proposal creates two exemptions: a one-time pathway allowing startups to raise up to $5 million over four years, and a broader exemption permitting offerings of up to $75 million in each 12-month period. Projects could potentially conduct repeated $75 million raises, provided each is treated as a distinct offering and receives the required SEC review.
The structure could increase demand for early-round allocations if investors expect later fundraising rounds to occur at higher valuations. However, non-accredited investors would generally be limited to investing 10% of the greater of their income or net worth, reducing the possibility of 2017-style speculative excess.
Experts say the framework is unlikely to trigger another ICO boom because issuers would face disclosure, reporting and regulatory requirements, while investor appetite has also been shaped by the high failure rate of earlier ICO projects.
A major uncertainty remains around secondary trading. Even if a token itself is not considered a security, transactions involving it could potentially constitute securities transactions if buyers reasonably expect profits based on the issuer’s continuing managerial efforts.
Legal experts warn this could leave some tokens in a regulatory grey zone between securities and non-securities, creating potential risks for issuers, exchanges and retail investors despite the clearer fundraising framework.