Regulation Crypto arrives Friday: what the SEC’s 400 page proposal actually says

The SEC votes August 14 on its first formal crypto rulemaking. The proposal creates three exemption pathways, a decentralization off ramp for tokens, and a framework that could make congressional legislation optional. Here is what each provision means in practice. Summary The SEC will hold an open meeting on August 14 to vote on publishing Regulation Crypto, a roughly 400 page proposed rule that would create a tailored offering regime for investment contracts involving crypto assets, the first time the agency has attempted formal rulemaking for digital assets rather than regulating through enforcement. The proposal includes three distinct pathways: a startup exemption allowing teams to raise approximately $5 million using whitepaper style disclosure for up to four years, a fundraising exemption permitting raises up to $75 million in any 12 month period with audited financials and semiannual reporting, and an investment contract safe harbor that allows tokens to exit securities classification once their networks reach sufficient decentralization. TD Cowen managing director Jaret Seiberg described the proposal as “a pivotal rulemaking” in an August 11 research note, arguing it would ...