CryptoSlate
The SEC unveiled a sweeping proposed rule that would create dedicated fundraising lanes for token issuers, with caps ranging from $5 million to $75 million, alongside a formal process for ending the investment contract once a founding team has finished its promised work. The package, dubbed Regulation Crypto Assets, entered the Federal Register on Aug. 21 and is open for public comment through Oct. 20, after which the commission must review submissions and vote on a final rule before any project can use the new exemptions.
Why it matters
The proposal is the SEC's first attempt to write a complete, crypto-specific fundraising and reporting regime, building on its March interpretation that a token can take part in a securities transaction without retaining that status forever. It distinguishes the digital object on-chain from the financing bargain that connects a buyer's money to the issuer's managerial work, then codifies the moment that bargain ends. Rule 400 turns that endpoint into a safe harbor, requiring an issuer to complete or permanently cease every essential managerial effort it represented, certify it is making no new promises, and file Form TR on EDGAR with a written explanation. The rule is available to any qualifying issuer, including those that raised through Regulation D or another exemption, so the reach extends beyond the new offering paths.
Market impact
The three-lane structure borrows dollar limits from Regulation Crowdfunding and Regulation A, then rewrites the eligibility and disclosure rules for token projects. A $5 million startup exemption runs up to four years for individuals or informal groups under a Form NOR filing. Tier 1 allows US-organized entities to raise $20 million with unaudited financials, while Tier 2 reaches the $75 million ceiling but requires an independent audit. Both larger tiers also carry US-domicile and US-executive requirements, three new reporting forms (1-KC annual, 1-SC semi-annual, 1-UC event-based within four business days), and preemption of state registration for eligible sales. Non-accredited buyers face a 10% of income-or-net-worth cap; accredited investors have no rule-specific limit; and the contracts carry no rule-based resale lockup. The package lands weeks after the CFTC's framework for Bitcoin perpetuals gave the derivatives side a clear home, leaving token fundraising as the missing piece.
Frequently asked questions
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How much can a US crypto project actually raise under the new SEC framework?
Up to $75 million in 12 months under Tier 2 with audited financials. The startup exemption caps at $5 million across up to four years, while Tier 1 allows $20 million in 12 months with unaudited statements. All three tiers carry crypto-specific disclosures on Form 1-CRYPTO or Form NOR.
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What is Rule 400 and how does a project exit the securities contract?
Rule 400 creates a safe harbor letting an issuer end the investment contract by completing or permanently ceasing every essential managerial effort it promised, certifying no new promises, and filing Form TR on EDGAR with a written explanation. Later token transfers can then be treated separately from the fundraising.
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Who is allowed to invest under Regulation Crypto Assets?
Both larger tiers admit unlimited retail buyers, but non-accredited investors are capped at 10% of annual income or net worth, whichever is greater. Accredited investors face no rule-specific cap. The startup exemption permits general solicitation but carries no rule-based retail purchase limit.
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What are the US-domicile requirements for the larger tiers?
Tier 1 and Tier 2 issuers must be organized under US law, conduct business principally in the US, hold more than half their assets in the country, and have a majority of executives and directors as US citizens or residents. The startup exemption has no such entity requirements.
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When could projects actually start using the new rules?
Not yet. The proposal entered the Federal Register on Aug. 21 with comments due Oct. 20. The SEC must review those submissions and vote on a final rule before any project can raise under the framework, meaning earliest use is months after final adoption.
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