US digital asset regulation is facing a major shift! New SEC regulations may open a $75 million “green channel” for crypto financing

The Zhitong Finance App learned that the US Securities and Exchange Commission (SEC) proposed on Tuesday to enact the first permanent federal rule on digital asset financing. The framework will allow crypto projects to raise up to 75 million US dollars without a full securities registration.

The SEC announced that the proposal, called the “Crypto Asset Regulation,” will establish two exemptions from registration requirements under the 1933 Securities Act for specific investment contracts involving crypto assets. One “startup exemption” will allow the project to issue up to $5 million within four years, while the other “financing exemption” will allow the project to issue up to $75 million within any 12 months.

Issuers that rely on any of these exemptions must provide investors with narrative disclosure in accordance with the requirements of principle. Issuers using the larger exemption of $75 million must also file financial statements and meet ongoing disclosure requirements. For issuances that rely on the new exemptions, the proposed rules will replace existing securities registration and qualification requirements in each state.

The framework also provides a conditional safe haven for the definition of “securities” in the Securities Act of 1933 and the Securities Exchange Act of 1934. If the issuer has completed or permanently ceased any necessary development work that it has previously represented or promised, then the underlying crypto asset will no longer be part of the investment contract and may therefore be completely removed from the SEC's jurisdiction.

SEC Chairman Paul Atkins said on Tuesday that the proposal was “the most historic step to date in modernizing federal securities regulation applicable to crypto assets.” He compared the proposal with current regulation and described the past period as issuers and investors having to face “a weaponized SEC that aggressively enforces this asset class.”

Atkins said that the SEC still supports Congress in advancing the Digital Market Asset Clarity Act, also known as the Clarity Act. The bill is currently awaiting review in the Senate, and a procedural vote is scheduled for September. The SEC chairman positioned the proposal as a bridge and stated that the relevant work was “too important” and could not wait for legislation to be completed before proceeding.

Rafael Zaguri, CEO of Bitcoin finance company Twenty One Capital, said that for this kind of asset, which can be used both as a commodity with low production costs, as collateral for loans, and can be the foundation for building financial products, the real limitation is not a lack of interest from institutional investors or developers, but a lack of clear regulatory rules.

Zaguri added, “The measures being promoted by the SEC and the signals previously released by the US Monetary Commission (OCC) regarding franchising are steps towards removing this restriction. In terms of direction, this is the regulatory environment we are in as a native Bitcoin operator — the industry is able to build on a solid regulatory foundation rather than being forced to grow without a regulatory foundation.”

Prior to the announcement of this proposal, the US Treasury Department had just initiated a 60-day public comment period on the proposed rules of the GENIUS Act's stablecoin regulatory framework. That means there were two major federal-level cryptocurrency regulatory rulemaking actions in the same week.

The SEC's proposal also puts an end to Washington DC's busy week of cryptocurrency policy agenda. Additionally, executives from Coinbase Global (COIN.US), Ripple (XRP.US), Polymarket, and Gemini (GEMI.US) are expected to attend a White House event on Wednesday, and traditional financial institutions including NASDAQ and the New York Stock Exchange will also participate. Former SEC Chairman Gary Gensler and US Commodity Futures Trading Commission (CFTC) Acting Chairman Michael Selig are also expected to attend.