The United States’ Securities and Exchange Commission [SEC] has long been involved in the cryptocurrency space. Back in 2017, the SEC had clamped down on Initial Coin Offerings and termed them as “illegal sale of securities.” However, on 6 February, in what could be construed as a differing opinion, the SEC Commissioner Hester Peirce proposed a safe harbor for token projects.
While speaking at the International Blockchain Conference, Peirce stated that crypto-startups would have a three-year grace period for their first token sale in order to achieve a level of decentralization, a level that is enough to pass through the SEC’s securities evaluation which also includes the Howey Test. Peirce noted that her fellow SEC commissioners have legitimate concerns about the potential for fraud with token offerings, according to a leading media outlet.
In a recent interview, Peirce claimed that despite such concerns, the guardrails provided by her proposal would protect investors and also allow innovation to flourish. The publication noted,
“Those guardrails would require companies selling tokens to publish detailed information about their projects on their websites, including the identity of the ICO team members as well as the project’s source code, transaction history, and financial beneficiaries. To avail themselves of the safe harbor, and avoid trouble with the SEC, companies would have to file a notice document with the SEC’s online Edgar system.”
If the SEC adopts the Commissioner’s proposal, it would address complaints related to itself, those raised by crypto-users who have for years accused the SEC of stifling innovation and pushing new startups or businesses outside the US.
According to Catherine Coley, the CEO of Binance.US,
“If adopted, the proposed safe harbor could be the most groundbreaking development for the U.S. cryptocurrency market to date. In the long run, it will help bring more Americans into digital asset trading and foster greater network participation.”
The risk of fake projects and ICOs still lingers, however, and Peirce is focused on providing transparent rules while giving way to innovation. She urged users,
“My message to people is, always think carefully before you buy something. For companies, if you don’t share the required information, the SEC can bring a fraud case. It’s designed to shed light on these projects.”