The Chairman of the U.S. Securities and Exchange Commission (SEC), Paul Atkins, has called for the agency to consider implementing a “safe harbor” proposal to facilitate cryptocurrency companies and certain types of tokens to benefit from appropriate regulatory exemptions.
Speaking at a cryptocurrency lobbying event held on Tuesday in Washington, D.C., Atkins stated that his proposal includes three main elements: “exemption for startup companies,” “fundraising exemption,” and “safe harbor for investment contracts.”
“It’s time we move beyond just diagnosing the problem and focus on providing solutions,” he emphasized. “Such a safe harbor mechanism would enable innovators in the cryptocurrency space to have dedicated pathways for fundraising in the U.S., while ensuring appropriate investor protections.”
On the same day, the SEC, in coordination with the Commodity Futures Trading Commission (CFTC), released a guidance document clarifying which types of cryptocurrencies are considered securities, as well as how “non-security digital assets” may be regulated under securities laws.
Proposed Exemptions for the Cryptocurrency Sector
In his speech, Atkins suggested that the SEC should consider applying a “startup exemption,” allowing cryptocurrency companies to raise a certain amount of capital or operate within a limited timeframe, providing enough “regulatory adaptation time” for sustainable growth.
He also proposed a “fundraising exemption” to enable investment contracts related to cryptocurrencies to raise a maximum amount within 12 months without needing to register under securities regulations.
Another part of his proposal is the “safe harbor for investment contracts,” which would help issuers of digital assets and investors have transparency and certainty about when these assets will be subject to securities laws. According to him, this safe harbor would apply once the issuer has “permanently ceased all essential management efforts” they committed to undertake regarding the assets.
Atkins also revealed that he expects the SEC to soon publish proposed rules related to these exemptions for public comment within the next few weeks. However, he emphasized that “only Congress can ensure the sustainability of the legal framework in this field through comprehensive legislation on market structure.”
Currently, a bill aimed at clearly defining the SEC’s authority over cryptocurrencies is stalled in the Senate, as negotiations over the bill’s provisions are ongoing.
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