The SEC proposed Regulation Crypto Assets to create a tailored exemptive framework with fundraising limits up to $75 million. Meanwhile, DeepSeek is seeking outside capital as its founder's hedge fund faces volatility in China's IPO market.
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SEC Proposes Tailored Offering Regime for Crypto Assets
Creating an explicit regulatory off-ramp for tokens that transition out of investment contract status allows sponsors to underwrite crypto projects using traditional terminal value models.
The Securities And Exchange Commission proposed a tailored exemptive framework called Regulation Crypto Assets to govern offerings of digital tokens. The framework establishes a startup exemption permitting issuers to raise up to $5 million over a four-year period and a fundraising exemption modeled on Regulation A allowing up to $75 million in a twelve-month period. Under the proposal, digital assets would have an official off-ramp from federal securities laws once developers complete or permanently cease essential managerial efforts. The rules also preempt state blue sky registration requirements for primary offerings and secondary market transactions by expanding the definition of qualified purchasers. Public comments on the proposal remain open until October 20, 2026.
DeepSeek Seeks Fresh Capital Amid Challenges in China's IPO Market
Relying on pre-IPO tech windfalls and quant trading profits to subsidize massive AI compute budgets creates structural cash flow mismatches when capital markets freeze.
cnbc.com reports that DeepSeek is seeking outside capital as founder Liang Wenfeng's hedge fund High-Flyer Quant faces unstable revenue amid volatility in China's IPO market. High-Flyer previously financed DeepSeek using profits from algorithmic stock trading and recent pre-IPO investments in Chinese hard-tech firms. High-Flyer affiliates secured $26 million in pre-IPO shares of memory chipmaker CXMT, which surged over fivefold in its Shanghai debut in July. The quant funds and DeepSeek also invested a combined $5.8 million in robot maker Unitree Robotics, with DeepSeek taking a 2.31% stake subject to a 36-month lock-up period. While High-Flyer's trading operations experienced drawdowns when a global AI-chip rout hit quant funds in July, Beijing's push for strategic domestic listings has created lucrative pre-IPO opportunities. DeepSeek now uses its corporate balance sheet to build strategic relationships across the AI and robotics stack while looking beyond its founder's fund for new financing.
Pre-IPO Allocations ($M)
CXMT is the funds' largest allocation at 26 million dollars.
Regulators are attempting to build clear paths for digital asset offerings while private tech firms face choppy public market conditions. Whether new exemptive thresholds can revive broader listing activity despite regional market volatility is unresolved.