Galaxy Research Head Envisions Crypto New Rule: May Provide Legal Pathway for U.S. Token Issuance

BlockBeats News, August 21st - Galaxy Research Director Alex Thorn stated that the U.S. Securities and Exchange Commission (SEC) proposed the "Regulation Crypto Assets" on August 18th. This is the first set of securities rules in the U.S. specifically designed for the issuance and sale of crypto assets, rather than simply applying traditional stock regulatory frameworks. The proposal may bring two significant changes to the U.S. crypto industry: firstly, allowing eligible token projects to legally issue to the public (including non-accredited investors); and secondly, establishing a clear mechanism for token-related investment contracts to formally terminate after meeting certain conditions, thereby addressing the longstanding issue of the uncertain security status of many historical tokens.

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

Fundraising Stage: Introduces two types of fundraising exemptions, where the Startup Exemption allows projects to raise $5 million over a maximum of 4 years; the larger exemption similar to the Regulation A framework allows fundraising of $20 to $75 million within 12 months.

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

Development Stage: Projects can complete the core development work promised to investors within a specified period.

Exit Stage: When the project fulfills or ceases the relevant development obligations and submits a transition report, the investment contracts related to the token can be deemed terminated, and the token will no longer be subject to security regulation under that investment contract.

Alex Thorn believes that the significance of Reg Crypto lies in establishing the first "token lifecycle" regulatory framework, where a token may initially constitute an investment contract due to project development commitments, but as the project matures, the security attribute can be concluded through a clear process.

However, this rule is still in the proposal stage, and its final implementation faces regulatory changes, state regulatory challenges, and congressional legislative impacts. If ultimately enacted, Reg Crypto may propel the U.S. towards an "ICO 2.0 Legal Edition," establishing a new regulatory foundation for project funding, token circulation, and investor protection.