SEC proposes crypto fundraising rules with a $75 million cap

The SEC proposes Regulation Crypto Assets to govern token fundraising from issuance through the end of an investment contract. The proposal includes fundraising limits of $5 million, $20 million, and $75 million. The $5 million startup exemption could operate for up to four years through Form NOR. Tier 1 would allow up to $20 million with unaudited financial statements. Tier 2 would allow up to $75 million with an independent audit. Eligible issuers would need to be organized under US law and conduct most of their business in the United States. Form 1-CRYPTO would disclose the issuer's promises, token supply, governance, source-code security, and financial condition. Rule 400 would provide a safe harbor after the issuer completes or permanently stops every essential managerial effort it promised to undertake. The issuer would then file Form TR on EDGAR with a certification and supporting analysis. The proposal entered the Federal Register on Aug. 21. The SEC must review comments and adopt a final rule before any project can use the exemptions.