SEC Chair Paul Atkins Proposes Exemption Path for Crypto Financing
SEC Chair Paul Atkins stated that the "Regulation Crypto Assets" aims to provide a clear path for crypto asset entrepreneurs and market participants to raise funds under federal securities laws, designed as a transitional rule while Congress establishes a long-term regulatory framework.
The SEC plans to establish two types of exemptions under the Securities Act of 1933: the first type allows issuers to raise up to $5 million in a single offering within four years; the second type allows issuers to raise up to $75 million every 12 months.
Both types of exemptions require issuers to provide principle-based narrative disclosures to investors; issuers using the $75 million limit must also submit financial statements and fulfill ongoing reporting obligations.
The proposal establishes a conditional "safe harbor": if certain conditions are met, crypto assets may not be considered "investment contracts" under the definitions of the Securities Act of 1933 and the Securities Exchange Act of 1934; the logic of the safe harbor is that the issuer has fully or permanently ceased to perform its core management activities promised in the investment contract.
The rules also prioritize federal regulation, excluding state securities laws from registration and qualification review requirements for certain offerings, sales, and specific secondary market transactions conducted under this exemption. The public comment period will open 60 days after the proposal is published in the Federal Register.
In market mechanisms, the demand side for financing consists of projects wishing to issue tokens in the U.S., raise early capital, and enter the secondary market; the supply side includes retail and institutional investors providing funds, as well as trading platforms, custodians, and market makers that provide token liquidity. The $5 million path reduces compliance startup costs for early projects, while the $75 million path offers greater financing capacity in exchange for financial statements and ongoing disclosures; U.S. compliant infrastructure with auditing, disclosure, KYC, and market monitoring capabilities benefits, while projects with anonymous issuance, lack of responsible parties, or inability to prove decentralization face pressure.
Source: Public Information
ABAB AI Insight
The historical breaking point for crypto financing in the U.S. was the 2017 ICO wave, which packaged public token sales as "utility tokens." The SEC gradually shifted its focus back to the methods of fundraising, the issuer's ongoing commitments, and the buyers' profit expectations through cases like The DAO Report, Telegram Open Network, and Ripple. Telegram terminated the TON Gram issuance in 2020 and paid a civil penalty of $18.5 million; this case shows that even if a token plan is intended for future network functionality, early financing sales may still be considered securities offerings. Regulation Crypto Assets attempts to preemptively address this litigation risk by establishing an optional financing system.
The capital pathways will be rewritten in layers. Small teams can use the $5 million exemption for limited-scale financing, while projects needing greater liquidity and institutional funds can opt for the $75 million path, accepting financial statements and ongoing disclosures. Token issuance will no longer be limited to a binary choice between "fully registered" and "offshore issuance," but will introduce an intermediate layer that exchanges information disclosure, funding caps, and conditional safe harbor for access to federal markets; lawyers, auditors, issuance agents, compliance custodians, and regulated trading platforms will become fee nodes in the financing chain.
The historical analogy is the tiered small public financing established by Regulation A+ and the JOBS Act. The traditional securities market has long served qualified investors with Reg D private placements, small crowdfunding with Reg CF, and larger-scale but lighter disclosure public financing with Reg A+; the crypto asset proposal does not abolish securities laws but incorporates token issuance into a similar tiered structure. The industry is transitioning from the ICO era of global unlicensed financing to a period of institutional expansion dominated by federal exemption limits, ongoing reporting, and verifiable issuers.
Essentially, this represents a change in regulation. The SEC has extended its judgment on whether tokens constitute investment contracts from merely looking at the initial sale point to whether the issuer still bears key management functions; the safe harbor thus provides a legal transitional mechanism for projects from reliance on issuers to independence from them. The reason for this shift is that simple enforcement cannot distinguish between genuine network decentralization and projects that continue to raise funds under the guise of decentralization; the regulated pathway exchanges financing convenience for disclosure and accountable entities, but it will also concentrate capital and liquidity among issuers and platforms that can afford compliance fixed costs.
ABAB News · Cognitive Laws
- The boundary of financing freedom is ongoing responsibility.
- The safe harbor is not an exemption but a decentralization acceptance.
- The higher the compliance costs, the more concentrated the capital.