Author: 0xFacai
A legal path for public token fundraising has re-emerged in the United States.
On August 18th, the U.S. Securities and Exchange Commission released a draft of "Regulation Crypto Assets." According to this draft, early-stage projects can raise up to $5 million over a maximum period of four years, while larger-scale projects can raise $20 million or $75 million within 12 months. Projects can sell tokens to investors to fund network development without completing a full securities registration process.
It sounds like ICOs are back.
But the SEC is offering much more than just three fundraising tiers. It aims to establish a set of rules for tokens from birth to "graduation": projects can first sell tokens to raise funds, but must clearly explain what they intend to do with the money; if the core work promised by the team is not completed, the tokens continue to bear the regulatory responsibility of the investment terms; only after the promises are fulfilled do the tokens have a chance to exit this relationship.
"Promises" are at the heart of the entire draft. Developers must "get things done" until the token "graduates," then they can "dev sell."
The Rules
The draft gives project founders two options.
The first is suitable for early-stage teams. Assume a project needs $3 million for development. In the past, common choices were to seek venture capital, restrict buyers and launch tokens outside the U.S., or bear the high cost of registering as a security. The new draft allows it to use the "startup enterprise exemption" to raise no more than $5 million over a maximum of four years, and to file with the SEC at the beginning and end of the fundraising.
The second option is for projects with larger funding needs. The first tier allows raising up to $20 million every 12 months, and the second tier up to $75 million. Compared to the $5 million startup exemption, this path can be used repeatedly, but the rules are stricter.
Projects cannot simply submit a whitepaper and start selling tokens. Both exemptions require teams 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 two larger fundraising tiers also require providing and regularly updating financial statements; the $75 million tier requires an audit.
The SEC has not removed existing guardrails. Issuers and insiders with serious violations cannot use these exemptions; anti-fraud and anti-manipulation liabilities remain in effect. Projects using other securities exemptions simultaneously must also comply with existing rules for aggregating fundraising amounts.
How "Graduation" is Defined
The most intricate yet crucial part of the entire draft is separating the treatment of the token from the investment relationship formed around it.
When a project sells tokens to raise money for building a network, what buyers often get is not just a usable digital asset. They also anticipate the team developing the product, attracting users, increasing token demand, and profiting from these efforts. This relationship, dependent on the team's future work, is what the SEC calls "investment terms."
A token itself can be merely a digital asset. However, how a project sells it and what promises are made to buyers can wrap it in a layer of investment terms. What the SEC is actually 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 ceases all its promised critical management work, makes no new relevant promises, and submits a public certification and analytical explanation to the SEC can the token enter the "safe harbor."
This introduces the concept of a token "graduating."
A project sells tokens promising to build something. Once the project is built and the key work is complete, and buyers no longer depend on the team to fulfill the original promises, the token can "graduate," and the project team can exit.
The New Rule Doesn't Focus on Whether a Token is a Security
Previously, the market often debated whether a network was "sufficiently decentralized" to determine when a token was no longer subject to securities laws. As long as a foundation, development company, or founding team continued to operate, many viewed it as the token still relying on a central entity.
The SEC draft asks a different question: What promises did the project make to sell the tokens initially, and have those promises been fulfilled?
For example. Project A tells investors during its token sale that the team will develop the mainnet, launch transfer and staking functions, and then hand the network over to decentralized validators. Later, the mainnet launches, the functions work, but the validators are still controlled by the team. Since "decentralizing the network" was also a promise made during fundraising, the token cannot "graduate" at this point.
Project B promises during its token sale only to create a functional network, without writing "the team must disappear" or "the network must achieve a certain level of decentralization" into its fundraising promises. Once the network is live and the product works, the team's later bug fixes, version updates, funding for developers, and product promotion—these routine maintenance activities—do not fall within the "investment terms." The product investors initially waited for has been delivered, and the token's value begins to derive more from actual utility, network operation, and market supply and demand.
The SEC focuses on whether the market is still waiting for the team to fulfill the key promises made during the token sale. The continued existence of a core team is no longer the universal yardstick for whether a token can graduate.
The core team can stay. Unfulfilled promises cannot.
Say Less, Promise Less
This approach of judging whether a project has "fulfilled its promises" will significantly influence future project marketing strategies.
Corporate securities lawyer Gabriel Shapiro points out that by tying a token's ability to shed investment terms to the project team's public promises, the SEC gives teams an incentive to say less and promise less in the future. The fewer promises a project makes, the less work it needs to prove completed before "graduation."
Roadmaps are therefore no longer just marketing materials. If a project promises mainnet launch, revenue growth, achieving decentralization, or building a certain feature, it will later have to answer the same question: Is this work done? The more ambitious the story a team tells during fundraising, the harder it is to exit after the TGE.
This creates a new contradiction. Buyers need sufficient information to judge whether a project is worth investing in, while project teams have an incentive to lower promises to enter the "safe harbor" earlier. Too little disclosure prevents investors from assessing risk; too many promises make graduation difficult.
New Paradigm for Airdrops
This draft will also impact the design of airdrops and points campaigns.
The first scenario is a retrospective airdrop. The project did not promise a token in advance; it simply rewarded early users afterwards. Recipients paid no money, provided no services for this airdrop, and after the announcement, don't need to trade or complete tasks. Such non-securities crypto asset airdrops could fall into the scope previously explained by the SEC.
The second scenario is an advance-notice points campaign. The project tells users upfront that trading, buying a certain asset, purchasing services, or completing tasks can earn future tokens. Participants pay money, provide services, or take action. This type of distribution is more likely to form investment terms and be counted towards the $5 million ICO exemption limit.
Therefore, some have linked this draft to Hyperliquid's long-awaited, yet unconfirmed, Season 3 airdrop. If a project only rewards past behavior after the fact, the legal relationship is much simpler. If a project announces points rules in advance and uses future tokens to attract trading volume, the points campaign creates additional regulatory burdens.
Existing information cannot prove Hyperliquid knew the SEC's policy direction in advance; this association remains market speculation. More importantly, the SEC itself is also soliciting opinions: How should the value of airdropped tokens be calculated? Should the startup enterprise exemption include special rules? There are no final answers yet.
The current Regulation Crypto Assets is still a draft. All three sitting SEC commissioners voted in favor, but the rules still await public comments.
The ICO model of "My project is cool, send me money" is gone forever. In the future, how much a project can raise will be determined by exemption limits. Whether a token can "graduate" depends on what the team told the market and what it actually delivered.
