The SEC proposed on August 18 new rules allowing crypto companies to raise capital through two exemptions from securities registration: one capped at $5 million over a four-year period with narrative disclosures, and another reaching up to $75 million per year with financial statements and ongoing reporting obligations. The proposal also includes a conditional safe harbor that could remove certain crypto assets from the definition of investment contract, and by extension from the definition of security, once an issuer has completed or permanently ceased all essential managerial efforts promised to investors. The rules further preempt state securities registration and qualification requirements for offerings under either exemption and some secondary market sales. The SEC will take public comments for 60 days after the proposal is published in the Federal Register.
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