SEC proposes crypto fundraising exemptions up to $75 million

The U.S. Securities and Exchange Commission proposed a new regulatory framework on August 18 that would create tailored exemptions for cryptocurrency fundraising, marking a significant shift in the agency's approach to digital assets. The proposal, titled "Regulation Crypto Assets," aims to provide clearer pathways for capital formation while maintaining investor protections.

The framework establishes two primary fundraising routes. A "startup exemption" would allow eligible crypto projects to raise up to $5 million over a four-year period without full securities registration. A larger "fundraising exemption," modeled partly on Regulation A, would permit offerings of up to $75 million within a 12-month period. Issuers using the larger exemption would be required to provide audited financial statements and meet ongoing reporting requirements. Both exemptions would mandate that issuers provide investors with narrative disclosures and would remain subject to federal antifraud and anti-manipulation rules.

A central component of the proposal is a conditional safe harbor that outlines when a crypto asset could cease to be treated as part of an investment contract. Under this...