The U.S. Securities and Exchange Commission’s proposed Regulation Crypto Assets aims to provide clearer pathways for token-based fundraising, but experts caution it will not revive the unregulated initial coin offering (ICO) frenzy of 2017.
Under the proposal, issuers could raise up to $75 million in any 12-month period, with the option to return annually for additional funding as long as each offering remains distinct. A separate exemption allows up to $5 million over four years for early-stage startups. Both pathways require detailed disclosures and ongoing reporting, including annual and semiannual filings, and impose limits on non-accredited investor participation to 10% of their income or net worth, whichever is greater.
Legal experts highlight that while the framework introduces a more structured approach to token sales, it does not eliminate regulatory scrutiny. Subsequent raises would require new offering statements and SEC staff review, preventing automatic or unlimited access to capital. Projects seeking $225 million, for example, could theoretically raise funds in stages, but each tranche would face fresh compliance hurdles.
The proposal’s design introduces potential risks for secondary market trading. If a crypto asset’s value remains tied to an issuer’s managerial efforts, its transfer could still be classified as a securities transaction, exposing exchanges and trading venues to legal uncertainty. This ambiguity could leave retail investors in a familiar grey area of opaque disclosures and concentrated insider holdings.
Analysts estimate the new exemptions would attract around 130 offerings annually and up to 475 issuers under a broader safe harbor, a modest scale compared with the 2017 boom. The SEC’s framework also arrives amid a sobered investor landscape, where up to 90% of ICO-funded projects from 2017-2019 failed. The agency’s move is seen as a step toward legal clarity, but its restrictive conditions and recurring compliance costs may temper enthusiasm for serial fundraising.
