Is the United States reopening ICOs? Interpreting the Three Opportunities brought by Reg CA The United States may really need to reopen the door to ICOs. On August 18th, the SEC officially proposed Reg CA, the first token issuance rule specifically designed for Crypto, hoping to allow eligible projects to publicly develop tokens for financing in the United States. After the news came out, many people referred to it as "ICO 2.0", but why didn't the United States allow projects to be freely ICO in the past? What exactly did Reg CA release this time? To understand the return of this round of ICO, we need to start with the past token financing restrictions in the United States TL;DR 1. The United States may reopen ICOs: Reg CA allows eligible projects to publicly develop tokens for financing to ordinary investors. 2. Tokens may truly have fundamentals: projects with real income may be more clearly linked to economic rights such as income, repurchases, dividends, etc. in the future. 3. Focus on three types of opportunities: regulated old tokens, real cash flow projects, and Launchpad/on chain financing platforms. one ️⃣ What has Reg CA changed? In the past, when American projects wanted to publicly develop tokens, they always faced a dilemma: Either register as securities and assume full registration, disclosure, and ongoing reporting obligations; Either opt for exemption, but subject to restrictions on investors, financing methods, or liquidity. So a large number of projects choose to issue coins overseas, and even directly restrict the participation of American users. But things will be different in the future. Reg Crypto has designed two financing paths for tokens for the first time. -Startup Exertion for early-stage projects, raising up to $5 million in funding over 4 years -Fundraising Offer is aimed at larger projects and can raise up to $20 million or $75 million within 12 months, but requires SEC qualification, financial reporting, and Tier 2 auditing. The key is that tokens can be publicly sold to ordinary investors, and in principle, there is no mandatory holding period for traditional private equity securities, so they can be resold immediately. This is enough to excite Crypto, as future startups do not need to look for VC and can directly raise funds from future users, which is also known as "ICO 2.0" by the community. But it is not a simple return to the 2017 ICO. When financing, the project needs to disclose information such as token supply, unlocking, and governance permissions, and clarify what to do after receiving the money and what steps are currently being taken. After completing the commitment or permanently ceasing performance, the project can submit a Transition Report to officially terminate the covered investment contract related to the Token, and the Token itself can still continue to trade. Simply put, 2017 was about 'raising money first, then discussing it later'; ICO 2.0 incorporates financing, disclosure, construction, and exit into its rules. two ️⃣ The biggest burden of tokens may be being unraveled Reg CA not only solves the problem of 'how to issue new tokens in the future', but also addresses the lingering issue of whether tokens are securities or not? In the past, many projects have been trying to prove that their tokens are not securities, because once they are recognized as securities, they have to face stricter issuance, disclosure, and trading rules. This also brings two problems. Firstly, many token issuances may involve investment contracts, but the project has been running for many years, and there has been no clear answer on when this securities law relationship will end. Secondly, in order to avoid tokens becoming more like securities, many projects also dare not allow them to directly undertake the value of the protocol. Especially in the design of dividends, profit distribution, and active repurchase, it may enhance the securities' attributes. So there is a strange phenomenon in Crypto: the protocol is clearly profitable, but tokens can only be used for governance, staking, and incentives, making it difficult to directly share the revenue from the protocol. Reg CA provides new solutions for both of these problems. 1) After the project is completed or the promised work is permanently stopped, and a Transition Report is submitted, the investment contract relationship related to the Token can be terminated, and this Safe Harbor also applies to old Tokens that have been issued in the past. 2) The project does not necessarily have to find a way to prove that the token is not a security, but can allow the token to undertake clearer economic rights under the corresponding regulatory framework. Based on the SEC's own estimates, old tokens may actually be the most significant short-term impact: The SEC expects that approximately 130 new projects will be financed through Reg CA each year, but there may be 475 old projects utilizing the new rules to address the legacy security identity issues of tokens. So the first wave of impact after Reg CA's landing may not be the sudden emergence of a large number of new ICOs, but rather helping a group of old tokens solve the long-standing security identity problem. three ️⃣ Which platforms and projects may benefit? Following the previous changes, the impact of Reg CA is not just about the return of ICO. From the current market perspective, I believe there are at least three types of projects that deserve renewed attention. (1) Old tokens with long-standing securities disputes Some old projects have no major issues with their business, users, and ecosystem, but their prices have always included a difficult to quantify "regulatory discount" The market will worry about SEC investigations, lawsuits, delisting of US exchanges, institutions being afraid to hold, and even projects being unable to expand into the US market normally. These risks will not directly appear in revenue and TVL, but will long-term lower the valuation that the market is willing to give. (2) Projects with real income but insufficient capture of token value Crypto used to judge tokens by often looking at TVL, trading volume FDV， Narrative, but rarely really calculating 'how much profit corresponds to this token' like stocks. If more and more tokens start to have clear economic rights in the future, the market will naturally begin to distinguish between two types of projects: -Token supported by narrative -Token supported by cash flow So this line should look for protocols with established business models and clear cash flows, such as mature DeFi lending and trading fees, on chain brokerage trading revenue, RWA platform management and service fees, and stablecoin issuers' reserve income. (3) On chain financing/Token issuance platform If the scale of token financing expands again, one of the biggest incremental markets may not be a single token, but a new industry formed around issuance. As early as last year, Crypto attempted "ICO 2.0". Last year, Solana's ICM core was to enable startups to not only seek VC, but also directly issue tokens to raise funds from the community. Believe first popularized this mode, and later http://Pump.fun We have also started to focus on developing ICM. Reg CA is more like adding a formal set of regulatory rules to the direction explored by ICM in the past year. If this road runs through, http://Pump.fun 、 MetaDAO, Echo/Sonar, CoinList and other on chain financing platforms may further transform from "coin issuing platforms" into crypto financing entry points. four ️⃣ When will Reg CA land? Finally, we need to pour cold water: Reg CA is currently only a proposal and has not officially come into effect yet. The SEC proposed the rules on August 18th, published them in the Federal Register on August 21st, and is currently conducting a 60 day public opinion solicitation until October 20th. Afterwards, the SEC will review the opinions, modify the rules, and decide whether to formally approve them, but there is currently no official timetable. Due to the complexity of the proposal itself, the market generally expects it to be as early as 2027 or even later. Moreover, Reg CA is not the ultimate answer to crypto regulation. It mainly solves the financing, disclosure, and exit of investment contracts for tokens, and issues such as exchanges, brokers, and custodians are not included in this set of rules; There is also a possibility of rules being modified during future SEC elections. So there's no need to rush to shout 'ICO is back' now, Reg CA is still some way from truly landing.