SEC chair calls for major Regulation A reform to boost crypto funding

U.S. Securities and Exchange Commission (SEC) Chairman Paul S. Atkins has called for significant reforms to Regulation A, highlighting its shortcomings in supporting capital raising for crypto asset issuers and small businesses.

Speaking at the SEC’s Small Business Capital Formation Advisory Committee meeting, Atkins criticised the current framework for imposing disproportionate compliance costs and limiting access to funding.

“Regulation A has not been a viable regulatory framework for widespread use by all issuers, including those offering certain types of crypto asset securities, to raise capital without disproportionate compliance costs,” Atkins noted.

He urged the committee to consider broad and targeted amendments to make the rule more accessible and efficient.

Despite a 2021 increase in the offering cap from $50 million to $75 million, Regulation A offerings have declined over the past two years, and the capital raised remains small compared to other exemptions like rules 506(b) and 506(c).

The SEC chair raised questions about allowing at-the-market offerings, currently prohibited under Regulation A, and whether preempting state regulation for secondary resales under Tier 2 could improve liquidity.

Atkins also pointed out the limited geographic uptake of Regulation A, concentrated in just six states, and called for analysis on why most states see minimal offerings.

His remarks signaled a shift toward integrating crypto ventures more effectively into existing capital markets infrastructure by reducing regulatory friction.

This focus on crypto asset issuers marks a notable change in tone from the SEC, reflecting an openness to reform that could create viable capital-raising channels for blockchain projects.

According to Atkins, addressing these regulatory hurdles represents a critical opportunity to expand access and inclusivity within the SEC’s capital formation mission, potentially unlocking new funding avenues for the crypto industry.