SEC's token on-ramp: a $5M starter round, a $75M tier, and the end of state review

The first exemption would permit a one-time offering of up to $5 million over four years; the second would allow companies to raise up to $75 million in any 12-month period, with issuers subject to ongoing reporting requirements. Both would require issuers to provide disclosures to investors.

The proposed rules would prevent states from imposing separate securities registration requirements on certain crypto offerings that qualify for the federal exemptions.

The "startup exemption" would be a one-time, non-exclusive exemption from Securities Act registration requirements allowing a funding round of covered investment contracts of up to $5 million.

Atkins stated the proposal "would also allow for a safe harbor once an issuer has completed or permanently ceased all essential managerial efforts that it represented or promised it would take under an investment contract."

For both exemptions an issuer would be required to make principles-based disclosures; for the $75 million exemption, issuers would need to file financial statements alongside ongoing reporting.

Both exemptions would require disclosures, while federal antifraud and antimanipulation rules would still apply.

Atkins said: "The SEC continues to support congressional work on the CLARITY Act, and we expect to see the bill reach the president's desk. Under our current statutory authority, we are acting. The work before us is too important."

A setback in negotiations over the Clarity Act sank hopes that the market-structure legislation would be passed this year; Atkins had signaled in late July that the Commission was prepared to step in with its own rules if the bill fell short.

The public comment period will be open for 60 days after the proposed rule is published in the Federal Register.

The proposal comes after the SEC abruptly canceled a meeting on Regulation Crypto Assets last week, citing an "unforeseen scheduling issue."

On Monday, Crypto In America reported that SIFMA, a Wall Street trade group representing broker-dealers, investment banks and asset managers, had discussed a potential legal challenge to the SEC's authority, and that the White House had asked the agency to postpone the meeting amid Clarity Act negotiations.

The exemptions align with the current Reg CF and Reg A+ exemptions created under the JOBS Act of 2012, which support online capital formation alongside Reg D 506c.

The Fundraising Exemption would include two tiers similar to Reg A: under Tier 1 issuers could offer up to $20 million of covered investment contracts in a 12-month period; under Tier 2 up to $75 million, but they must file offering documents along with audited financial statements and periodic reporting.

SEC Commissioner Hester Peirce acknowledged the proposed exemptions would not cover every type of crypto project and called on the industry to provide feedback, writing that "This proposal is one step on a long road toward a clear, sensible, enforceable regulatory framework for crypto."

States have continued to voice concerns about diminished authority; states sued the SEC over Reg A+ and eventually lost in court. States can still pursue fraud.

On Monday, the U.S. Treasury Department proposed regulations implementing the GENIUS Act that would generally require stablecoin issuers to obtain federal or state licenses beginning in January 2027, with crypto platforms facing restrictions on selling stablecoins from unapproved issuers beginning in July 2028.

The $5 million one-time exemption averages $1.25 million per year over its four-year window, and the $75 million annual ceiling is 60 times that annual pace.

The difference between the Tier 1 cap of $20 million and the Tier 2 cap of $75 million is $55 million, and Tier 2 is the tier that carries audited financial statements and periodic reporting.