The biggest positive news in the crypto world, is compliant token financing making a comeback?

Author: 0xFacai

Public token sales have regained a legal path in the United States.

On August 18, the U.S. Securities and Exchange Commission released the draft of "Regulation Crypto Assets." According to this draft, startup projects can raise up to $5 million over a maximum of four years, while larger projects can raise $20 million or $75 million within 12 months. Projects can sell tokens to investors without completing a full set of securities registration, in order to raise funds for network development.

It sounds like ICOs are back.

However, the SEC offers much more than just three funding limits. It aims to establish a set of rules for tokens from inception to "graduation": projects can sell tokens to raise funds, but they must clearly state what they intend to do with the money; if the key commitments made by the team are not fulfilled, the tokens will continue to bear the regulatory responsibilities of investment terms; only after fulfilling the commitments can the tokens have a chance to exit this relationship.

"Commitment" is the core of the entire draft; developers must "do the work" until the tokens "graduate" before they can "dev sell."

Rules

The draft provides two options for project teams.

The first option is suitable for startup teams. Suppose a project needs $3 million for development; the common choice in the past was to seek venture capital, restrict buyers, and issue tokens outside the U.S., or bear the high costs of registering securities. The new draft allows it to use the "Startup Exemption" to raise no more than $5 million over a maximum of four years and file with the SEC at the start and end of the fundraising.

The second option is suitable for projects with greater funding needs. The first tier allows raising up to $20 million every 12 months, while the second tier allows up to $75 million. Compared to the $5 million Startup Exemption, this path can be reused, but the rules are stricter.

Projects cannot start selling tokens with just a white paper. Both exemptions require the team to disclose how the network will be governed, how the product will be developed, what security risks the code has, the company's financial status, and who is managing the project. The larger two tiers of financing must also provide financial statements and continuous updates, with the $75 million tier requiring an audit.

The SEC has not removed the original safeguards. Issuers and insiders with serious violation records cannot use these exemptions, and anti-fraud and anti-manipulation responsibilities continue to apply. If a project uses other securities exemptions simultaneously, it must also comply with existing fundraising aggregation calculation rules.

How to Define "Graduation"

The most convoluted and important part of the entire draft is the separation of tokens and the investment relationships formed around them.

When a project sells tokens to raise funds for network construction, the buyers often receive not just a usable digital asset. They are also expecting the team to deliver the product, attract users, increase token demand, and profit from these efforts. This reliance on the team's future work is what the SEC refers to as "investment terms."

The token itself may just be a digital asset, but how the project sells it and what commitments are made to buyers will wrap it in a layer of investment terms. What the SEC is really regulating is this relationship between the issuer and the buyer.

The draft designs an exit path for tokens. Only after the issuer completes or permanently halts all key management work they committed to, makes no new related commitments, and submits public certification and analysis to the SEC, can the tokens enter the "safe harbor."

Thus, the concept of "graduation" for tokens is established.

When a project sells tokens to raise funds, it commits to building the network. Once the project is completed and key work is done, buyers no longer rely on the team to fulfill old commitments, allowing the tokens to "graduate" and the project team to exit.

New Rules Do Not Focus on Whether Tokens Are Securities

In the past, the market often judged when a token was no longer subject to securities law by questioning whether the network was "sufficiently decentralized." As long as the foundation, development company, or founding team continued to work, many would interpret it as the token still relying on a central entity.

The SEC draft changes the question: What commitments did the project initially rely on to sell the tokens, and have those commitments now been fulfilled?

For example, Project A tells investors when selling tokens that the team will develop a mainnet, launch transfer and staking functions, and then hand the network over to decentralized validators. Later, the mainnet is launched, and the functions are usable, but the validators are still controlled by the team. Since "decentralizing the network" was also a commitment during fundraising, the tokens cannot "graduate" at this time.

Project B, on the other hand, only commits to creating a functioning network without stating that "the team must disappear" or "the network must reach a certain level of decentralization" in its fundraising commitments. Once the network is online and the product is usable, if the team continues to fix bugs, update versions, fund developers, and promote the product, this routine maintenance does not fall under the "investment terms." The product that investors initially waited for has been delivered, and the value of the tokens begins to derive more from actual use, network operation, and market supply and demand.

The SEC is concerned with whether the market is still waiting for the team to fulfill the key commitments made during the token sale. The continued existence of the core team is no longer a uniform measure of whether the tokens can graduate.

The core team can remain. Unfulfilled commitments cannot remain.

Less Talk, Less Action

This way of judging whether a project has "fulfilled its commitments" will greatly influence the project's promotional strategy.

Corporate securities lawyer Gabriel Shapiro suggests that the SEC tying whether tokens can escape investment terms to the public commitments of the project team will motivate teams to say less and commit less in the future. The fewer commitments a project makes, the less work it needs to prove it has completed before "graduation."

The roadmap is no longer just marketing material. If a project commits to launching a mainnet, increasing revenue, achieving decentralization, or building certain functions, it will have to answer the same question in the future: Have these tasks been completed? The more complete the story the team tells during fundraising, the harder it will be to exit after the Token Generation Event (TGE).

There is also a new set of contradictions hidden here. Buyers need enough information to judge whether a project is worth investing in, but project teams have the incentive to lower their commitments to enter the "safe harbor" sooner. Too little disclosure makes it impossible for investors to assess risk; too many commitments make it difficult for the project to graduate.

New Paradigm for Airdrops

This draft will also affect the design of airdrops and points activities.

The first scenario is retrospective airdrops. The project does not promise to issue tokens in advance but rewards early users afterward. Recipients do not pay money or provide services for this airdrop, and they do not need to trade or complete tasks after the announcement. Such non-security crypto asset airdrops can fall within the scope previously explained by the SEC.

The second scenario is pre-announced points activities. The project informs users in advance that trading, purchasing a certain asset, buying services, or completing tasks can earn future tokens. Participants have invested money, services, or actions, making this type of distribution more likely to form investment terms and count toward the $5 million ICO exemption limit.

Therefore, some have linked the draft to Hyperliquid's delayed confirmation of the Season 3 airdrop. If the project only rewards past behavior afterward, the legal relationship will be much simpler; if the project announces point rules in advance and uses future tokens to attract trading volume, the points activity will incur additional regulatory burdens.

Current information cannot prove that Hyperliquid knew the SEC's policy direction in advance; this association remains speculation in the market. More importantly, the SEC is also seeking opinions: How should the value of airdropped tokens be calculated, and do the Startup Exemptions need additional specific rules? There are currently no final answers.

The current Regulation Crypto Assets is still a draft. All three sitting SEC commissioners voted in favor, but the rules are still awaiting public comments.

The ICO model of "My project is cool, give me money" is gone for good. In the future, how much a project can raise will be determined by the exemption limits. Whether tokens can "graduate" depends on what the team has said to the market and what they have actually completed.