SEC commissioner Hester Peirce wants to give legitimate crypto projects a chance to succeed without conflicting with U.S. securities laws.
Since cryptocurrencies first hit global markets in 2009, there has been a long-standing debate as to whether a company’s initial token offering should be classified as securities or whether it is sufficiently decentralized to escape the SEC’s jurisdiction.
To date, the SEC has sued a number of companies that have created and sold tokens, including Telegram and Kik, two major news platforms. Another example is Ether (ETH), which, according to William Hinman, the SEC’s director of corporate finance, initially appeared as a security, but no longer qualified as such after its maturity.
Innovative crypto projects could arise
Hester Peirce, often referred to as “crypto mama”, was first appointed to the US stock exchange regulator in early 2018 and has been a strong supporter of cryptocurrencies since then. And although this is not the first time that she is committed to establishing a protected cryptocurrency port, the announcement is the first formal attempt to create the necessary framework for young crypto project.
During the Commissioner’s speech at the international blockchain congress in Chicago, she outlined her proposal to allow a three-year grace period during which new startups can sell their initial tokens without being considered securities.
In essence, the new safe haven would anticipate current government securities laws and give crypto projects enough time to allow their tokens to mature into a fully decentralized cryptocurrency. However, this would not protect companies against law enforcement measures due to illegal activities.
If the SEC’s proposal is accepted by the SEC, Commissioner Peirce will set about creating a strict framework that allows crypto-relevant projects to offer or sell tokens to raise money while protecting investors’ interests. This regulation could create many new and innovative projects in the cryptocurrency industry.
–
