Foreign media: Galaxy Research argues that the first change in the Reg Cripto framework proposed by the US SEC may not be a new round of open tokens, but rather a formal legal exit route for tokens that have been in circulation for many years.

In an analysis on August 21, Galaxy stated that the proposal sought to answer a long outstanding issue: If a token was originally issued under an “investment contract” arrangement, when it could no longer be treated within that framework. According to the proposal, the issuer may submit a transitional report to the SEC after completion or permanent termination of the core management of the commitment to the purchaser and declare that the conditions have been met.

More projects are expected to start with exit mechanisms

The SEC expects that approximately 475 distributors will use this “safe port” to submit a transition report each year. By contrast, the two new types of financing exemptions in the proposal are expected to total approximately 130 releases per year.

According to Galaxy, this gap suggests that for many existing projects it may be more urgent to address the current legal identity of the token than to re-engage in open financing. The agency ' s research manager, Alex Thorn, indicated that the short-term significance of Reg Cripto might be more in the case of securities law, which deals with stock tokens, than in the case of promoting a large number of new tokens for public sale.

The proposal applies to encrypted assets that are not securities per se but have been issued or sold as part of an investment contract. Arrangements for the design of monetization stocks, bonds or blending with securities such as equity are not within this framework.

Two types of financing exemption synchronized

In addition to the safe harbour, Reg Cripto also proposed two types of exemption from registration under the Securities Act 1933.

The first is a path to start-up projects that allows the issuer to issue a related investment contract of up to $5 million over a four-year period, subject to public disclosure at the beginning and end of the period. The other category of reference A design is divided into two tiers: level I can finance up to $20 million within 12 months and level II up to $75 million.

Of these, a higher level of routing requires SEC qualification, financial statements and ongoing reporting. Secondary issuers are also required to provide audited financial statements and to maintain strong organizational, managerial and asset links with the United States.

For non-qualified investors, the purchase cap is set at 10 per cent of the higher of the annual income or net asset. According to Galaxy, this means that for the first time, United States diasporas will have clearer legal channels of participation if they participate in the issuance of compliance coins, but risk exposures are also capped.

Disclosure shift to token structure

Unlike traditional stock issue documents, the proposal requires the issuer to disclose information on the availability of tokens, the unlocking rhythm, the mechanism of proliferation and destruction, governance arrangements, smart contract privileges, source codes and the project ' s ecological structure.

According to Galaxy, these elements are more closely related to the actual concerns of currency buyers. Since token holders usually do not have the natural right to vote, to divide or to liquidate corporate shares, supply control and contractual authority affect investment judgement even more.

Galaxy also noted, however, that Reg Cripto still did not cover specific rules for exchanges, brokers, dealers and trustees, nor was it clear whether the withdrawal of a currency from the “investment contract” status automatically transferred to the United States Commodity Futures Trading Commission (CFTC) regulatory scope.

At the same time, it reminded that the SEC Rules could still be amended by the new Commission in the future and that legislative cooperation was still needed to create a more stable regulatory basis. In this connection, CLARTY Act is expected to have a parliamentary vote on September 15th. SEC published Reg Crypto in the Federal Gazette on 21 August and the public opinion call closed until 20 October.