SEC proposes new offering exemptions for token sales
Regulation & Gov ·
The proposal, dubbed "Regulation Crypto Assets," would create two dollar-capped exemptions and a safe-harbor exit from securities status for decentralized projects.
The SEC's Aug 18 proposal sets out a "Startup Exemption" allowing token issuers to raise up to $5M over a 4-year period, alongside a larger "Fundraising Exemption" capped at $75M within a single 1-year window. The framework also includes a conditional safe-harbor mechanism letting tokens move out of security classification once a project reaches a sufficient level of decentralization. A 60-day public comment period is now open, giving industry participants, legal practitioners, and other stakeholders a formal window to respond before any rule is finalized.
The dual-cap structure is designed to give both early-stage and more established projects a defined path to raise capital domestically without immediately triggering full securities registration requirements, according to details laid out by cryptopotato.com. The smaller exemption targets startups still building out their networks, while the larger one accommodates broader fundraising rounds, though only within the shorter one-year timeframe. The safe-harbor provision is the piece most directly aimed at resolving the long-running ambiguity over when a token stops being treated as a security, tying that transition to a project's progress toward decentralization rather than leaving it undefined.
The move comes as Congress's CLARITY Act remains stalled, leaving the SEC's rulemaking as the more immediate avenue for regulatory clarity on token issuance in the near term, a dynamic noted by theblock.co. Coverage from decrypt.co framed the proposal as a potential catalyst for renewed U.S.-based token fundraising activity, given that founders have often opted to launch offerings offshore to avoid securities uncertainty. Other summaries circulating in the same cluster similarly emphasized the dual exemption caps and the pathway for tokens to exit securities classification upon a project reaching completion or sufficient decentralization.
Four distinct sources have now covered the proposal, consistent in describing its core structure, though implementation remains months away pending the close of the comment period and any subsequent revisions. What remains unresolved is how the SEC will define "sufficient decentralization" in practice for the safe harbor to apply, and whether the proposal will move forward on its own timeline or be affected by eventual congressional action on the CLARITY Act. Market and industry reaction during the comment period, along with any amendments the SEC makes in response to feedback, will shape whether the framework achieves its stated goal of supporting new U.S. project formation.