Blockchain Association Files Comments on SEC’s Proposed Crypto Asset Rule: Recommends Raising Startup Exemption Cap to $10 Million

On October 21, the Blockchain Association (@BlockchainAssn) posted on X, stating that the association has submitted a comment letter to the U.S. Securities and Exchange Commission (SEC) regarding the proposed Regulation Crypto Assets. The committee led by SEC Chair Paul Atkins previously proposed exemptions for startups and fundraising activities, as well as a safe harbor mechanism to clarify when tokens no longer qualify as investment contracts.

The association's main recommendations in the letter include:

• Define objective standards: Non-exclusive indicators should be provided to determine when an issuer's core managerial efforts have ceased, such as open-sourcing the code or eliminating entities with unilateral transaction review powers.
• Align liability with control: Project teams are only responsible for areas within their control; third-party applications and community activities are excluded. Exchanges, liquidity providers, and others that rely in good faith on project SEC filings should be protected.
• Establish a safe harbor for existing tokens: Qualified third parties such as trading platforms may file declarations for issued tokens, and such filings shall not be deemed an acknowledgment that the token was once a security.
• Raise exemption thresholds: Increase the startup exemption limit to $10 million, excluding airdrops and network rewards from the limit; raise the fundraising exemption limit to $150 million, and allow on-chain transparency to replace audited financial statements.
• Strengthen federal preemption: Tokens meeting federal requirements should not face disparate state regulations across more than 50 states, including assets issued prior to the rule's effective date and trading activities relying on project SEC filings.
• Improve secondary markets: Address intermediary registration issues, establish customized frameworks for trading venues, and support 24/7 trading and self-custody.