Morning Minute: SEC Brings Clarity to Crypto

GM!

Today’s top news:

For a decade, the SEC regulated crypto fundraising by lawsuit, suing token issuers one at a time without ever publishing rules explaining what legal looked like. Now that’s changing.

The smaller path allows a one-time raise of up to $5 million over four years. The larger allows up to $75 million in any 12-month period, a ceiling that mirrors Reg A+ Tier 2, the mini-IPO framework Congress built through the JOBS Act. Both require principles-based narrative disclosures closer to a whitepaper than a registration statement, and the $75 million tier adds financial statements and ongoing reporting. The rules would also preempt state registration requirements for exempt offerings and certain secondary trades.

There is also a very important safe harbor provision. Under the proposal, a qualifying token stops being subject to an investment contract once the issuer has completed or permanently ceased all the essential managerial efforts it promised. Chairman Paul Atkins traces the framework directly to the Token Safe Harbor that Commissioner Hester Peirce first proposed in February 2020, which the industry has been asking for ever since.

Now there are clear rules for token sales in the U.S. And if these proposed rules go through, expect an ICO wave to follow.

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