SEC Approves Crypto Asset Regulation Proposal Through Seriatim Vote, Sources Say

The U.S. Securities and Exchange Commission has approved a proposed rule change that would create a regulatory framework for certain crypto asset offerings, according to a Fox Business reporter citing unnamed sources and an SEC spokesperson. The approval was conducted via seriatim voting, bypassing a public commission meeting, raising questions about transparency and procedural rigor. Fox Business journalist Eleanor Terrett reported on X (formerly Twitter) that the SEC had voted to approve the proposal, which is designed to provide a "safe harbor" for specific crypto asset issuances. The news was later corroborated by an SEC spokesperson who confirmed the vote but declined to provide further details until the official text is published. Industry observers note that the seriatim voting process, which allows commissioners to vote individually rather than in a public session, is unusual for a rulemaking of this magnitude. The last time the SEC used seriatim voting for a major rule was in 2020, when it approved amendments to the definition of an exchange. The decision to skip a public meeting may indicate internal political sensitivity or procedural disagreements, according to regulatory analysts. Under the terms of the proposal — which remain unverified until the official release — the SEC would create a new exemption from registration for certain crypto asset offerings. The exemption would reportedly cap issuances at $5 million over a four-year period, or an annual limit of $75 million. This mirrors elements of existing Regulation A and Regulation Crowdfunding frameworks but is tailored to digital assets. A key condition for eligibility is that the project must have completed "core management work" before the offering. This phrase is likely borrowed from the SEC's earlier discussions on "sufficient decentralization," suggesting that the network must reach a certain level of decentralization for its tokens to qualify for the exemption. However, specific quantitative metrics for decentralization have not been disclosed. The proposal does not declare that crypto assets are not securities; rather, it offers a conditional exemption from registration. Projects that fail to meet the ongoing conditions, including the decentralization requirement, could still face enforcement actions under securities laws. Market reaction to the news was muted, as the details remain unconfirmed and the official text is not yet public. Some analysts warned that the market might be too optimistic about the impact. Even if the exemption is finalized, it applies only to small issuances, meaning larger projects may still need to pursue alternative compliance paths. The rule could also create new demand for compliance infrastructure, including on-chain identity verification, investor whitelisting, and KYC/AML data privacy tools. Legal experts are already scrutinizing the procedural aspects. The combination of seriatim voting and the cancellation of a public meeting could leave the rule vulnerable to legal challenges under the Administrative Procedure Act, which requires agencies to provide notice and opportunity for comment. The SEC did not hold a formal public comment period on this specific proposal before the vote, according to records. The SEC declined to comment further. The official rule text is expected to be published on the SEC's website within the coming days. If finalized, the framework would mark a significant shift in U.S. crypto regulation. It would provide a clear pathway for smaller projects to raise capital from U.S. investors without going through the full registration process, potentially reducing the number of projects that choose to domicile overseas. However, the process's lack of transparency and the vagueness of the decentralization threshold could create uncertainty for both issuers and investors. The proposal is expected to face a period of public comment after publication, followed by potential revisions before a final vote. The timeline for implementation remains unclear.