SEC proposes new framework for crypto assets

The U.S. SEC proposes new framework for crypto assets, aiming to clarify when digital tokens fall under federal securities law.

Exemption thresholds and safe‑harbor provision

The regulator outlined two carve‑outs from the registration mandate of the Securities Act of 1933. The first allows a one‑time issuance of up to $5 million in tokens over a four‑year span. The second permits ongoing offerings not exceeding $75 million in any twelve‑month period.

Both exemptions target “certain investment contracts involving crypto assets,” a phrase the commission uses to differentiate stand‑alone tokens from bundled securities deals. A conditional safe‑harbor would shield qualifying tokens from being labeled investment contracts, provided issuers meet a checklist of disclosure and reporting duties.

Critics note the limits could still push some projects toward offshore jurisdictions, where oversight is lighter. The agency argues the thresholds are modest enough to encourage domestic innovation while preserving core investor protections.

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Public comment period and next steps

Stakeholders have 60 days to submit feedback on the proposal. The commission said the rulemaking builds on guidance issued earlier this year, which clarified that most digital assets are not securities unless they are sold as part of an investment contract.

“By building on the commission’s interpretive guidance issued earlier this year, the proposed rules aim to bring greater clarity to when crypto assets fall within the federal securities laws, reduce incentives for issuers to create and operate offshore, and expand investment opportunities for US investors with stronger, more consistent protections,” the filing states.

During the comment window, industry groups are likely to press for higher caps and broader safe‑harbor criteria. Meanwhile, consumer advocates may push for tighter disclosure standards to guard against fraud.

In practice, the proposed limits could affect dozens of token sales slated for this year. Companies that have already raised capital under existing securities exemptions might need to restructure their offerings to stay compliant.

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From a broader perspective, the move reflects a growing willingness among regulators to craft niche rules rather than applying a one‑size‑fits‑all approach. By carving out modest exemptions, the agency hopes to strike a balance between supporting innovation and preventing abusive schemes that have plagued the market.

The filing notes that the safe‑harbor would only apply if issuers maintain ongoing transparency, such as periodic financial statements and clear token‑holder rights. Failure to meet those conditions would revert the token to standard securities treatment.

Market participants will watch closely how the public comment process shapes the final language. If the agency adopts the proposals, issuers could launch new token offerings with greater confidence that they are not inadvertently violating securities law.

Any adjustments to the exemption amounts or safe‑harbor criteria will likely be disclosed in a revised proposal later this year, after the agency reviews the feedback it receives.