Galaxy Research Head: SEC Proposes Dedicated Rules for Crypto Assets, Potentially Paving a Legal Path for Token Issuance in the U.S.

Odaily News, Galaxy Research Head Alex Thorn stated that the U.S. Securities and Exchange Commission (SEC) proposed the "Regulation Crypto Assets" (referred to as "Reg Crypto") on August 18, marking the first set of securities rules specifically designed for the issuance and sale of crypto assets, rather than simply applying traditional stock regulatory frameworks. The proposal could bring two significant changes to the U.S. crypto industry: first, it would allow eligible token projects to conduct legal issuances to the public, including non-accredited investors; second, it establishes a clear mechanism to formally terminate investment contracts associated with tokens once conditions are met, thereby resolving the long-standing uncertainty over the securities status of numerous historical tokens.

According to the proposal, Reg Crypto would apply to crypto assets that "are not securities themselves, but were issued or sold as part of investment contracts." The framework mainly consists of four stages:

- Financing Stage: Two new types of issuance exemptions are introduced. The startup exemption allows projects to raise up to $5 million over a maximum of 4 years; a larger, Regulation A-like exemption permits raising $20 million to $75 million within 12 months.

- Disclosure Stage: Issuers are required to disclose information more tailored to the characteristics of crypto assets, including token supply, unlock schedules, minting and burning mechanisms, governance rights, smart contract information, source code, and project development progress.

- Development Stage: Project teams are permitted to complete core development commitments promised to investors within a specified timeframe.

- Exit Stage: Once the project completes or ceases its development obligations and submits a transition report, investment contracts associated with the token can be deemed terminated, and the token is no longer subject to securities regulation under those investment contracts.

Alex Thorn believes that the significance of Reg Crypto lies in establishing, for the first time, a "token lifecycle" regulatory framework — meaning tokens may initially constitute investment contracts due to project development promises, but as the project matures, this securities status can be brought to an end through a clear process. The SEC estimates that approximately 475 issuers per year might utilize the investment contract safe harbor mechanism, while only about 130 projects are expected to actually leverage the new financing exemptions. This suggests that the rule's short-term impact may be more reflected in resolving regulatory uncertainty for existing tokens, rather than immediately triggering a new wave of token issuances. However, the rule remains in the proposal stage, and its final implementation still faces challenges from regulatory changes, state-level regulator pushback, and congressional legislative influence. If ultimately approved, Reg Crypto could drive the U.S. toward a "legitimate ICO 2.0," establishing a new regulatory foundation for project financing, token circulation, and investor protection.