The Blockchain Association has asked the SEC to offer optional indicators of token decentralization, a change that could help issuers assess when an asset no longer depends on their managerial efforts.
In its comment on the SEC’s proposed crypto rules, the industry group said decentralization should be one way to make that assessment, rather than a condition every project must meet. It suggested open-source code and the absence of any party’s unilateral power to censor transactions as possible indicators.
The association also wants higher limits under two exemptions in the proposal. It asked the SEC to raise the startup limit from the proposed $5 million over four years to $10 million, and the higher tier for fundraising from $75 million to $150 million per 12 months. The group cited engineering, security and compliance costs in arguing for the increases and compared its startup request with Rule 504’s $10 million limit.
For issuers using the higher fundraising tier, the association asked the SEC to remove the requirement for audited financial statements. It argued that blockchain records allow investors to check some relevant information. On startup distributions, it distinguished airdrops it considers outside securities rules from other network distributions it wants excluded from the startup limit.
The group proposed a way for eligible third parties to file transition reports concerning previously issued assets, along with liability protection for people who file them in good faith. It also sought broader relief from specified state registration requirements for covered secondary-market transactions and further action on intermediary and money-transmitter rules where the SEC has authority.
The association backed 24/7 trading of crypto assets covered by investment contracts and self-custody. Its comment comes amid other requests for trading clarifications under the SEC proposal.
The SEC says the proposal aims to ease capital raising, including pressures that may push offerings offshore. Public Citizen has urged the agency to withdraw it, arguing that its exemptions and safe harbor would weaken safeguards for retail investors. The comment deadline passed Oct. 20; the SEC has announced no date for a final decision.
