The SEC proposed its first crypto rulebook — and left insider selling to disclosure

The US Securities and Exchange Commission proposed its first major crypto rule on Tuesday, a package it calls “Regulation Crypto Assets.” It would let a project sell up to $5 million of tokens over four years, or up to $75 million in any 12 months if it publishes financial statements and keeps reporting, without going through full securities registration. Nothing is law yet: the public has 60 days to comment before the SEC writes a final version.

The timing matters. The proposal landed days after the Senate failed to advance the Digital Asset Market Clarity Act, the market structure bill the industry has been waiting on, and days after the SEC abruptly cancelled its own August 14 meeting that was meant to vote on this very rule. SEC Chair Paul Atkins still called legislation “indispensable,” saying agency rules can be unwound by a future regulator in a way a law cannot. Commissioner Hester Peirce added that the exemptions would not cover every kind of crypto project and asked the industry to say what is missing.

For a beginner, two pieces are worth understanding. First, issuers using either exemption would have to disclose things about themselves in plain narrative form, and anti-fraud and anti-manipulation rules would still apply — an exemption from registration is not an exemption from lying. Second, the proposal includes a conditional safe harbor that lets a token “delink” from the investment contract it was sold under, once the issuer has finished or permanently abandoned the managerial work it promised. In practice that is the SEC sketching how a token stops being treated as a security.

The sharpest open question is about insiders. The SEC draft sets no minimum holding period, so founders, employees and other affiliates could sell as soon as their tokens stop counting as restricted securities. It caps how much rather than when: in a $75 million offering, affiliates could supply up to $22.5 million, the smaller tier tops out at $20 million with $6 million available to insiders, and during an issuer's first year insider sales are capped at 30% of the total raised. The Senate's July 22 CLARITY draft goes the other way, requiring insiders to hold for at least 12 months, then six more once the network is certified as free of coordinated control. Notably, the SEC is asking commenters whether it should add a one-year holding period before finalising the rule.

If you are new to this, the practical takeaway is small but real. A proposal is not a rule, and a rule is not a law, so nothing about how tokens are sold in the US changes this week. What the disclosure-first approach does mean is that the reading is left to the buyer: when a new token launches, who holds it, how much of it, and whether they are free to sell on day one become facts you are expected to look up rather than facts someone guarantees for you. That is information, not investment advice.