The U.S. Securities and Exchange Commission has released a draft framework that would give crypto projects a defined route to conduct public token offerings without completing a full securities registration, provided they meet offering limits, disclosure requirements, and rules governing promises made to token buyers.
The proposal, titled “Regulation Crypto Assets” and issued on Aug. 18, would establish several exemption tiers for token issuers. Early-stage teams could raise as much as $5 million over four years, while larger projects could use exemptions for offerings of up to $20 million in a 12-month period or up to $75 million over 12 months. The highest tier would require audited financial statements.
Three current SEC commissioners voted to publish the draft for public comment. The proposal would not take effect unless the agency adopts a final version after that process.
Tiered exemptions would bring disclosure requirements
The SEC’s proposed structure would give smaller projects longer fundraising runway but lower capital limits, while placing more demanding reporting obligations on larger offerings.
Projects relying on the $5 million startup exemption would need to make filings and disclosures when a raise begins and when it ends. Issuers using the $20 million or $75 million exemptions would face broader and ongoing update requirements, reflecting the larger sums they could collect from the public.
Required disclosures would cover the planned governance of the network, the project’s product-development process, risks related to code security, the issuer’s financial condition, and the identities and roles of people managing the project.
Those requirements would make roadmaps and token-sale materials more consequential. A team that tells buyers it will deliver a mainnet, launch a specific protocol feature, develop a revenue model, or hand governance to token holders would be creating commitments that could later determine whether it remains within the framework.
The $75 million tier’s audit requirement also draws a clear line between smaller experimental networks and projects seeking capital at a scale closer to established public fundraising markets. An audit would provide prospective token purchasers with an independent review of the issuer’s financial statements, although it would not validate the commercial prospects or security of a protocol.
The proposal centers on fundraising promises
The draft’s central legal approach focuses less on assigning a permanent label to a token and more on the relationship formed during a fundraising campaign.
Under the SEC’s description, the relevant issue is whether token buyers are relying on the future managerial or entrepreneurial work of the issuer to obtain an expected benefit. The draft refers to the promises and obligations involved in that relationship as “investment terms.”
That framing would shift the analysis away from a single question that has dominated many crypto regulatory debates: whether a blockchain network has become “sufficiently decentralized.” Instead, a project would need to examine the commitments made when it raised funds and whether the team has completed the work that purchasers were told would be performed.
For a network whose original sale materials promised decentralization, that transition could remain part of its obligations. For another project, the defining commitments might involve building the network, delivering software, establishing a governance system, or completing specified operational milestones.
The approach would place particular pressure on public communications. Statements made in token-sale documents, presentations, websites, points-program announcements, and social-media campaigns could help define the expectations attached to a sale. Broad promotional language could create avoidable compliance risks if it implies that a team will continue taking actions designed to increase a token’s value or utility.
A “graduation” process would create an exit route
The proposal includes an exit process sometimes called “graduation.” Under that process, a token could enter a safe harbor after the issuer has completed or permanently stopped all key managerial commitments connected to the offering and has stopped making new related commitments.
Before entering the safe harbor, the issuer would need to file a public certification and analysis with the SEC. That filing would explain why the project believes its obligations to purchasers have been fulfilled or ended.
The mechanism would give projects a path to move beyond the exempt-offering stage, but it would also create a record against which their earlier statements could be measured. A project that promises too much during its fundraising period could extend the period in which it remains tied to securities-law obligations.
The proposal therefore rewards narrower, more concrete planning over open-ended development claims. Teams would need to distinguish between milestones necessary to deliver what was sold to purchasers and ordinary future improvements that should not be presented as continuing commitments underpinning the token’s value.
Airdrops could face different treatment depending on design
The SEC’s draft also draws a distinction between types of token distributions commonly described as airdrops.
A retroactive airdrop rewarding users for past activity, without a previous promise that tokens would be distributed, could receive different treatment from a points program that tells users they can earn future tokens by taking specified actions. The draft says pre-announced arrangements can more readily create investment terms because participants may act in reliance on a promised token reward.
Such arrangements could also count toward the $5 million cap under the startup exemption, according to the proposal. That could force projects to consider the value of planned token rewards when calculating how much they can raise or distribute under the framework.
The SEC identified valuation of airdropped tokens as an unresolved issue for public comment. It also asked whether the startup exemption requires additional provisions tailored to early-stage crypto projects.
Existing enforcement restrictions would remain
The draft would not remove existing securities-law protections or create eligibility for issuers with serious compliance histories. Issuers and insiders subject to specified disqualifying violations would be barred from using the exemptions.
Anti-fraud and anti-manipulation provisions would continue to apply, and projects attempting to combine the new framework with other securities exemptions would remain subject to existing integration rules. Those rules are designed to prevent issuers from splitting what is effectively one fundraising campaign into separate transactions to avoid registration requirements.
If adopted, Regulation Crypto Assets would give token issuers a more structured set of choices than the case-by-case disputes that have shaped much of U.S. crypto enforcement. Its practical effect would depend heavily on the detail of final rules, particularly the standards for ending managerial commitments and valuing token distributions tied to user-reward programs.
For deeper context on U.S. policy shifts, explore the possible future of crypto regulation in the US and prepare your project strategy.
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