Grayscale Sees SEC Proposal Unleashing New Wave of US Token Offerings

The Securities and Exchange Commission’s (SEC) proposed Regulation Crypto Assets, which the regulator announced Tuesday (Aug. 18), could facilitate token-based fundraising in the United States, Grayscale Head of Research Zach Pandl said in an article published Wednesday (Aug. 19).

Token-based fundraising, in turn, could bring more U.S. issuers on-chain and drive value to underlying networks such as Ethereum, Solana and BNB Chain, according to the article.

Fundraising through the offering of newly issued tokens has been taking place overseas and not offered to U.S. investors due to regulatory ambiguity, the article said.

Regulation Crypto Assets aims to reverse that trend and reduce the incentive for issuers to move offshore. The proposal would create a path for issuers to come to market under existing U.S. securities laws, per the article.

“The bottom line for investors is that token-based fundraising is a potentially important use case of public blockchain technology — like stablecoins, tokenized securities and decentralized exchanges,” Pandl said in the article. “If the new rules can stimulate more issuance activity, that will bring more U.S. issuers and investors onchain and likely drive value back to the underlying blockchains and their native tokens, including [Ethereum, Solana and BNB Chain].”

When the SEC announced Regulation Crypto Assets on Tuesday, it said that the proposed rule would create a clear framework for certain investment contracts involving crypto assets.

“As we continue the Commission’s efforts to provide clarity for crypto markets, and as Congress works to establish a lasting regulatory framework, Regulation Crypto Assets seeks to provide crypto asset entrepreneurs and market participants with clear pathways to raise capital under the federal securities laws,” SEC Chairman Paul S. Atkins said at the time in a press release.

The SEC said in the release that together with the regulator’s March interpretation clarifying how federal securities laws apply to certain crypto assets and transactions involving crypto assets, the proposed Regulation Crypto Assets provides a securities offering regime designed to encourage responsible capital formation and innovation in domestic crypto asset markets.

PYMNTS reported Aug. 13, before the proposal was unveiled, that Regulation Crypto Assets could mark another step away from the “regulation by enforcement” approach long criticized by the crypto industry and toward regulation through defined exemptions and safe harbors.