The US Securities and Exchange Committee (SEC) has voted to suggest a set of rule changes to simply and meliorate the "patchwork" rules for exempt securities offerings.

The proposed rule changes aim to improve the existing 'complex and disruptive' framework to make it easier for companies to conduct offerings that yet protect investors.

In the US offerings of securities, including Initial Money Offerings (ICOs), must either be registered with the SEC or qualify for an exemption. The majority of entrepreneurs and emerging businesses — such as Telegram — raise upper-case letter via the exempt offering framework.

Unaccredited investor limit raised

Many exemptions in the crypto space fall under Rule 504 of Regulation D. Under the proposed rule changes the maximum amount that can be raised from non-accredited investors nether this dominion will increment from $v one thousand thousand to $10 meg in a 12 month period.

Announcing the proposed rules, the SEC said they "reflect a comprehensive retrospective review of the patchwork organization built over many decades, seek to accost gaps and complexities in the exempt offering framework that may impede admission to majuscule for issuers and access to investment opportunities for investors."

As 1 example the SEC notes the current framework has x exemptions or "rubber harbors", each of which have very different requirements thay "may be confusing and difficult for issuers to navigate." The new rules propose four non sectional 'condom harbors.'

The proposed amendments would also:

  • Implement i broadly applicative dominion to accost the ability of issuers to motility from one exemption to another and ultimately to a registered offering.
  • Increase the offering limits and revise certain private investment limits.
  • Set articulate and consistent rules guiding communications between investors and issuers, including assuasive issuers to employ generic solicitation of interest materials to 'test the waters' prior to determining which exemption information technology will utilise for the sale of the securities.
  • Harmonize certain disclosure and eligibility requirements and bad actor disqualification provision to reduce differences betwixt exemptions

Proposals reflect public submissions

The proposals accept been informed past public submissions, in response to the SEC's June 2022 concept release proposal. Public comment on the amendments will be open for 60 days from today.

The SEC has taken an active approach towards cryptocurrency projects that it believes have broken existing regulations around unregistered securities, near notably in its pursuit of Telegram over its $1.7 billion Gram token sale.

Chairman Jay Clayton said of the proposed rule changes:

"The complexity of the current framework is confusing for many involved in the process, peculiarly for those smaller companies whose limited resources spent on navigating our overly complex rules are diverted from straight investments in the companies' growth. These proposals are intended to create a more rational framework that better allows entrepreneurs to access capital while preserving and enhancing of import investor protections."

SEC too looks to expand definition of 'accredited investor'

The SEC is also looking to expand the definition of an "accredited investor" which currently means an private with a internet worth of $1 million or an entity controlling over $five million in avails. New rules proposed in December would aggrandize the definition out to those with professional cognition, experience or qualifications.

The existing rules are designed to protect everyday investors from predatory offerings, but are controversial considering they forbid ordinary people from taking advantage of wealth formation opportunities. The electric current Regulation D exemptions, depend on exclusively or primarily offer a security only to "accredited investors."