The US Securities and Exchange Commission has made its first move towards formalizing crypto-specific rulemaking. Chairman Paul Atkins has placed Regulation Crypto in the July priority slot, signaling a proposed rule that would allow crypto startups to raise capital without triggering full securities registration could arrive within weeks.
Regulation Crypto aims to give crypto founders three distinct pathways out of the Securities Act of 1933. These include a startup exemption, a fundraising exemption, and an investment-contract safe harbor. The startup exemption would grant temporary exemptions from securities registration for up to four years, allowing projects to raise up to $5 million.
The fundraising exemption would allow established projects to raise up to $75 million during any 12-month period, with audited financial statements and ongoing semi-annual reporting required. The investment-contract safe harbor addresses the issue of when a token stops being a security, providing a codified standard for confirming tokens are no longer subject to SEC jurisdiction.
The proposed rule is built on the March taxonomy, which divides digital assets into five categories: digital commodities, digital collectibles, digital tools, stablecoins, and digital securities. Regulation Crypto would convert this interpretive clarity into binding exemptive rules, allowing issuers to raise capital in categories 1 through 4 without full registration.
The rule faces a procedural hurdle before it can be published as a proposed rule, requiring clearance from the White House Office of Information and Regulatory Affairs. Once cleared, the rule will enter a formal public comment period, which could lead to months before the rule becomes effective law.