Galaxy says Reg Crypto could end token legal ambiguity

Galaxy Research has said the SEC’s proposed Reg Crypto framework could give hundreds of existing tokens a formal route out of investment contract status. Summary The SEC expects about 475 issuers each year to use the proposed safe harbor. Galaxy said the exit process could matter more initially than the two fundraising exemptions. Reg Crypto would permit qualifying offerings of up to $5 million or $75 million. Public comments on the proposed rules are due by Oct. 20. Galaxy Research, in an Aug. 21 analysis, said the proposal could replace years of uncertainty over when an investment contract tied to a token ends with a filing and a recorded date. Alex Thorn, Galaxy’s head of firmwide research, said the first visible effect could be the resolution of securities-law questions surrounding tokens already in circulation, rather than a fresh wave of public token sales. The SEC estimated that about 475 issuers would file transition reports under the investment contract safe harbor each year. By comparison, the agency expects approximately 130 annual offerings across the proposal’s two new fundraising exemptions. According to Galaxy, the difference suggests that existing projects may have ...