SEC Proposes Safe Harbor for Crypto Assets to Exit Investment-Contract Status

The U.S. Securities and Exchange Commission (SEC) proposed a framework that could allow certain crypto assets to cease to be treated as investment contracts while creating new routes for issuers to raise capital without registering an offering under the Securities Act.

Under the proposed “Regulation Crypto Assets,” the SEC would provide a conditional safe harbor subject to specified criteria. An issuer could qualify after completing the essential managerial efforts it had committed to undertake, or after permanently discontinuing those efforts.

The plan also sets out two registration exemptions for investment contracts involving crypto assets. One would permit up to $75 million to be offered within a 12-month period, subject to investor disclosures, financial statements and continuing reporting requirements. 

A second route would be available on a one-time basis for offerings totaling no more than $5 million across four years. Investor disclosures would also be required under that exemption.

The SEC is seeking public feedback on the proposed framework, with the comment period running for 60 days after the proposal is published in the Federal Register.

Source: U.S. SEC