SEC proposes Reg Crypto exemptions for token raises up to $75M per 12 months
The plan pairs a repeatable issuance path with language that could extend securities risk into secondary trading.
The SEC’s proposed “Regulation Crypto Assets” framework would create two exemptions for certain crypto-asset investment contract offerings, including a rolling cap that allows up to $75 million raised in any 12-month period. Legal experts say the structure looks closer to a mini-public offering than a frictionless ICO, and warn the bigger market-structure risk may land on secondary trading venues if investment contracts are deemed to travel with tokens.
Key Takeaways
- The SEC unveiled proposed “Regulation Crypto Assets” rules on Aug. 18 that would create two exemptions for certain crypto-asset investment contract offerings, including a rolling $75 million cap per 12-month period.
- The $75 million route is framed as partly modeled on Regulation A and would require disclosures and ongoing reporting, with SEC staff review for later raises.
- Lawyers said repeat fundraising could be possible under the 12-month cap, but each subsequent round would require a new offering statement and updated disclosures to confirm compliance.
- The proposal’s secondary-market language says an investment contract can keep transferring with a token until it separates from issuer promises, a condition that could raise exchange compliance risk.
SEC’s Reg Crypto Proposal: Two Exemptions and a $75M Rolling Cap
The SEC’s proposed “Regulation Crypto Assets” package, unveiled Aug. 18, introduces two exemptions aimed at certain offerings of crypto-asset investment contracts. One is a one-time startup exemption for offerings up to $5 million over four years. The other is a larger exemption that would allow up to $75 million raised in any 12-month period.
The $75 million pathway is described as modeled in part on Regulation A. That matters because it signals a disclosure-forward structure rather than a light-touch token sale regime. The proposal contemplates ongoing reporting requirements, and it sets up a process where later fundraising is not simply a repeat button.
For issuers, the headline is a clearer on-ramp for U.S. fundraising without full registration. For traders, the more immediate question is what this does to the pipeline of new supply and, more importantly, whether the SEC’s framing of “investment contracts” changes how secondary-market venues have to think about listings.
How “Serial Raises” Could Work—and the Paperwork That Comes With Them
The rolling nature of the $75 million cap is the feature that invites “serial raises.” Drew Hinkes, a partner at Winston & Strawn, said the 12-month limitation would allow “serial raises” of $75 million every 12 months, “provided they are actually distinct offerings.” Distinct is doing the work. It implies separable rounds with their own terms and documentation, not a continuous drip.
Lilya Tessler, a partner and leader of Sidley’s Global FinTech and Blockchain group, said “nothing prevents an issuer from relying on the exemption more than once,” but each raise “isn’t automatic.” Subsequent raises would require a new offering statement and an SEC staff review. Issuers would also need to file annual and semiannual reports.
The compliance hook is explicit. Tessler said issuers would need to “disclose what the issuer raised under the exemption in the prior 12 months so the cap can be verified,” which effectively forces a rolling lookback and updated disclosures each time the issuer returns to market.
The proposal’s own example points to staged financing. A project seeking $225 million total could potentially raise funds in chunks, then return later with a more developed network and potentially a higher valuation. That is a very different market structure from the one-shot, high-velocity distribution model that defined much of the 2017 cycle.
Why Legal Experts Don’t Expect a 2017-Style ICO Flood
The proposal may make public token offerings more feasible, but the expert read in the packet is that it does not reset the market to 2017. Duke University lecturing fellow Lee Reiners put it plainly: “My initial view is that the $75 million exemption could make public token offerings more feasible, but it is unlikely to produce a return to the ICO boom.”
The SEC’s own sizing supports that interpretation. The agency estimated around 130 offerings would use the two new exemptions each year, and around 475 issuers could potentially use the broader investment contract safe harbor. That is a controlled pipeline, not an issuance stampede.
The proposal still leaves room for scarcity-driven demand in early rounds. Reiners said: “If investors expect a successful issuer to conduct later offerings at a higher valuation, an initial allocation may become more attractive precisely because it is limited.” That mechanism can create early-round heat even in a more regulated wrapper.
Investor constraints also change the retail impulse dynamics. Tessler said non-accredited investors would be limited to buying “10% of the greater of their income or net worth,” regardless of which round they participate in. That cap makes the classic all-in retail behavior structurally harder.
Reputational damage from the last cycle is another brake. The packet cites that up to 90% of projects funded via ICOs between 2017 and 2019 ended up failing. Reiners said fundraising markets are “shaped by investor appetite, token economics, liquidity, custody, and the reputational damage left by the last ICO cycle.”
Open Questions That Will Decide Liquidity Outcomes
The trader-facing uncertainty is not only how many offerings clear the exemption. It is how secondary-market exposure is defined once tokens start trading.
The proposal states that an investment contract associated with a crypto asset can continue to transfer to subsequent purchasers in secondary-market transactions until the crypto asset separates from the issuer’s representations or promises. The packet does not define a clean operational boundary for that “separation,” and that ambiguity is where venue risk lives.
Hinkes warned that if a secondary transaction in a non-security covered crypto asset causes transfer of the investment contract from seller to buyer, “there is a risk that the sale of the crypto asset would be viewed as a securities transaction.” That framing pulls exchanges and other trading venues into the compliance blast radius, even if the token is marketed as a non-security asset.
The other unresolved piece is process. The packet provides no timeline for comment-period milestones, revisions, or finalization beyond the Aug. 18 unveiling. That leaves the market guessing on when, or whether, the framework becomes actionable.
Early venue responses will be a tell if the proposal advances. Listing standards, geofencing, delistings, or new disclosures would be rational second-order moves if exchanges conclude that “investment contract transfer” risk is not theoretical.
My Take: A Primary-Issuance Green Light That Could Tighten the Secondary-Market Noose
The threshold that matters is not the $75 million number. It is the SEC’s “separates from the issuer’s representations or promises” test, because that decides whether secondary spot liquidity is clean or structurally encumbered.
If the rule evolves into a workable separation standard, the $75M/12-month exemption looks like a controlled issuance lane with paperwork, not a 2017 reboot. If separation stays vague, exchanges will price the risk through listings and access, and that is where liquidity outcomes get decided in practice.
