SEC Closes Comment Period on Token Exemption Plan Allowing $75M Crypto Raises

Draft Rule Targets a Market Pushed Offshore

The US Securities and Exchange Commission is moving to reopen a lawful path for token fundraising: the comment period on its proposed Regulation Crypto Assets framework closed on Tuesday, October 20. Published on August 18, the draft rule would let digital asset issuers raise capital without full securities registration if they meet set conditions, and it aims at a market that has largely served American investors only from offshore since the 2017-2018 ICO boom collapsed under fraud cases and securities-law disputes. An ICO, in this context, is a sale of newly minted tokens delivered straight to investors' crypto wallets in exchange for project funding, the token-sale analogue of a stock listing. At the base of the proposed structure sits a startup exemption: an early-stage team could sell tokens worth up to $5 million over four years through a lighter process than a traditional registration. Larger projects would climb a tiered ladder, permitted as much as $20 million per year or $75 million in total, with the disclosure and reporting burden growing at each step up. Exemption is not deregulation. Issuers must still disclose how the business is structured, what the proceeds will fund and which risks investors carry, and liability for false statements or fraud stays fully intact. The draft's second pillar is a safe harbor. A token initially sold as part of an investment contract could shed its security status once the issuer completes, or permanently abandons, the core development work it promised and files a transition report with the SEC. The rule text stresses that development completion alone does not release every token; the outcome still depends on the offering's structure, the promises made to investors and whether the stated conditions are met. If finalized, the framework could give projects that now exclude US participants a domestic route, and could seed a regulated ICO market where investors can review a business plan and risk disclosures before committing funds.

Bitwise and Nasdaq Push for Changes

Comment letters filed before the deadline show where the fault lines sit. Bitwise, in a letter dated October 19, asked the SEC to give asset managers assurance they can rely on transition reports that clear agency review without an objection, a point that would matter for funds holding tokens that later exit security status. Nasdaq, the stock exchange operator, backed the framework overall but pressed for one explicit carve-out: tokenized stocks, bonds and exchange-traded funds should sit outside the exemption, keeping tokenized real-world assets on the traditional securities track. The docket held roughly 140 comments in total. The Blockchain Association argued the caps are too small once legal review, compliance and licensing costs are paid, and asked that the startup exemption rise from $5 million to $10 million and the top tier from $75 million to $150 million. Opposition ran in the other direction too. The Independent Community Bankers of America warned that easier token issuance would accelerate stablecoin adoption and pull deposits from smaller banks, citing an earlier estimate of up to $1.3 trillion in deposit movement and roughly $850 billion less lending capacity, though that figure was modeled on stablecoin growth generally, not on this proposal directly. Consumer group Public Citizen and former SEC enforcement head John Reed Stark went further, asking the agency to withdraw the draft on the grounds that it lacks legal authority to grant the exemption at all. The SEC now weighs the caps, the disclosure requirements and whether further economic analysis is needed.

Two Fights Decide the Final Text

COINOTAG's reading is that the docket splits into two fights that will shape the final rule: one over money, one over authority. Industry wants the ceilings raised; the banking group and the consumer-side opponents want the structure voided entirely. Finalizing the rule without answering the authority challenge invites immediate litigation, and any delay pushes back the date issuers care about most, the point at which a token can legally stop being a security. Until that date is set, projects weighing a US offering should read the draft against their own roadmap and run basic ICO due diligence before planning a raise around caps that may still move.