The SEC's proposed rulebook for token sales — what a project would have to put in writing

The US Securities and Exchange Commission has proposed a set of rules, called Regulation Crypto Assets, that would give token projects a legal route to raise up to $75 million from the public and, later, a public way to declare that the deal they sold is over. The proposal entered the Federal Register on Aug. 21 and comments are due Oct. 20. Nothing changes today: the commission has to read those comments and vote on a final rule before any project can use it.

The rules are aimed at a specific bargain rather than at tokens in general. Buyers put up the money that lets a team write the code, launch the network and make the token useful, and the team promises to do that work. Under US law that financing relationship can be an investment contract, and the SEC's framing calls it the covered investment contract. The token is the object recorded on-chain; the bargain is the promise attached to it. Separating the two is what lets the agency imagine an ending.

The proposal splits fundraising into a small startup lane and a larger two-tier lane. The startup lane allows up to $5 million over a period of as long as four years and is open even to an informal group that has not formed a company, provided it files a notice on Form NOR and publishes the required information free of charge on its own website. The larger tiers look more like a public offering: the issuer must be organized and principally operating in the US, file Form 1-CRYPTO on EDGAR, and wait for the SEC to qualify the offering before selling. Tier 1 permits $20 million with unaudited financials, Tier 2 reaches $75 million and requires an independent audit. Retail buyers are not capped in number, but a non-accredited buyer could invest up to 10 percent of annual income or net worth, whichever is higher.

For an ordinary buyer, the disclosure is the part worth caring about. Form 1-CRYPTO would spell out what the issuer is promising, the token's supply and allocation, how the network is governed, how the source code is secured, what conflicts of interest exist, what the build plan is, and how much money the team has and how long it can keep operating. After the sale, the record would stay current through an annual report, a half-year report and event reports filed within four business days. A white paper can quietly move its goals when a project falls behind; a filed offering statement is a fixed account of what was promised.

The ending is the unusual piece. Under the proposed Rule 400, an issuer that has completed or permanently stopped every essential managerial effort it promised could file Form TR, certify that it is making no new promise, and attach an explanation detailed enough for a reasonable investor to follow. From that point the fundraising relationship would be treated as closed. The SEC could still challenge a filing that misstates what a team has actually done, the safe harbor only covers the term investment contract, a token that separately behaves like stock or a note would need its own analysis, and private parties could argue the opposite in court.

Read this as a proposal, not as a rule you can rely on, and remember that a filing is a disclosure rather than an endorsement. If it is adopted, the useful habit for a beginner will be simple: look up what a team put in writing at the start, then check whether they ever filed to say the work was finished. Information, not advice.