The U.S. Securities and Exchange Commission proposed Regulation Crypto Assets, a tailored securities offering framework for investment contracts involving non-security crypto assets. The proposal would create a one-time startup exemption for offerings of up to USD 5 million over four years and a two-tier fundraising exemption, modeled partly on Regulation A, for offerings of up to USD 20 million or USD 75 million in a 12-month period. Both routes would require principles-based disclosures tailored to the investment contract, crypto asset, associated network or application, governance, development plans and risks, while issuers using the fundraising exemption would also provide financial statements and ongoing reports. Tier 2 financial statements would require an audit, and issuers would remain subject to federal antifraud and antimanipulation provisions. The proposal would also establish a conditional safe harbor under which an investment contract would be deemed to have ceased to exist once the issuer has completed or permanently ceased all promised essential managerial efforts, makes no new such promises and files a certification with supporting analysis. State registration and qualification requirements would be preempted for offerings under the new framework and certain secondary-market transactions while the issuer remains current with applicable disclosure and reporting obligations. Comments are due within 60 days after publication of the proposing release in the Federal Register.

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