Key Takeaways
- • The comment period on the SEC's proposed Regulation Crypto Assets closed, with interested parties filing a late surge of submissions from both supporters and opponents, according to Crowdfund Insider.
- • The proposal would create a one-time startup exemption permitting offerings of up to $5 million over four years, and a second exemption permitting offerings of up to $75 million in each 12-month period, with principles-based disclosures required under both.
- • New York Attorney General Letitia James argued the proposal exceeds the SEC's exemptive authority and demanded it be withdrawn, while Massachusetts Secretary of the Commonwealth William Galvin urged the Commission to reconsider and create a registration pathway.
- • Industry participants including Kraken parent Payward, Nasdaq, and the Solana Policy Institute broadly supported a federal framework, while Public Citizen called crypto a "Ponzi scheme" and the ICBA urged caution over bank funding impacts.
Summary
The deadline for public comments on the Securities and Exchange Commission's proposed Regulation Crypto Assets rules passed recently, with a flurry of filings submitted on the final day, according to Crowdfund Insider. The SEC proposed the rules last August to create a bespoke exemption for digital asset issuers, modeled on existing capital-formation exemptions under Regulation Crowdfunding and Regulation A. The proposal would allow a one-time startup exemption for offerings of up to $5 million over a four-year period, and a second option permitting offerings of up to $75 million in each 12-month period. Both options would require principles-based disclosures, and the $75 million option would also require issuers to file financial statements alongside ongoing reporting.
Opposition was led by New York Attorney General Letitia James, who argued the proposal exceeds the SEC's exemptive authority, identified deficiencies in the startup exemption, and described the proposed framework for investment contracts as "unworkable." She stated that state oversight authority must be preserved and called for the proposal to be withdrawn. Massachusetts Secretary of the Commonwealth William Galvin said he had "grave concerns" and rejected the notion that everyday investors would be adequately protected without a complementary state regulatory regime, urging the Commission to create a registration pathway with fulsome disclosure and pre-qualification review. Public Citizen called crypto a "Ponzi scheme" with no real utility and urged the SEC to resume enforcement actions.
Support came from Payward, parent company of Kraken, whose Chief Policy Officer Jonathan Jachym called the proposal an "important step" toward a U.S. market where new assets can be issued and traded with confidence, citing global competitiveness alongside the CFTC's parallel rulemaking. Nasdaq Executive Vice President John A. Zecca expressed support for a "tailored framework" while flagging points for refinement. The Solana Policy Institute described the proposal as a significant step, though its CEO Miller Whitehouse-Levine and General Counsel Patrick Wilson said its practical utility will depend on whether projects can launch under proposed Rule 200, disclose network facts under Rule 103, and obtain reliable transition treatment under Rule 400. The Wall Street Blockchain Alliance called the proposal a constructive step while offering selective recommendations. The Independent Community Bankers of America, through SVP Brian Laverdure, urged the SEC to proceed cautiously, coordinate with federal banking agencies, and assess effects on bank funding costs and deposit migration.
Opposition was led by New York Attorney General Letitia James, who argued the proposal exceeds the SEC's exemptive authority, identified deficiencies in the startup exemption, and described the proposed framework for investment contracts as "unworkable." She stated that state oversight authority must be preserved and called for the proposal to be withdrawn. Massachusetts Secretary of the Commonwealth William Galvin said he had "grave concerns" and rejected the notion that everyday investors would be adequately protected without a complementary state regulatory regime, urging the Commission to create a registration pathway with fulsome disclosure and pre-qualification review. Public Citizen called crypto a "Ponzi scheme" with no real utility and urged the SEC to resume enforcement actions.
Support came from Payward, parent company of Kraken, whose Chief Policy Officer Jonathan Jachym called the proposal an "important step" toward a U.S. market where new assets can be issued and traded with confidence, citing global competitiveness alongside the CFTC's parallel rulemaking. Nasdaq Executive Vice President John A. Zecca expressed support for a "tailored framework" while flagging points for refinement. The Solana Policy Institute described the proposal as a significant step, though its CEO Miller Whitehouse-Levine and General Counsel Patrick Wilson said its practical utility will depend on whether projects can launch under proposed Rule 200, disclose network facts under Rule 103, and obtain reliable transition treatment under Rule 400. The Wall Street Blockchain Alliance called the proposal a constructive step while offering selective recommendations. The Independent Community Bankers of America, through SVP Brian Laverdure, urged the SEC to proceed cautiously, coordinate with federal banking agencies, and assess effects on bank funding costs and deposit migration.
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