US Securities and Exchange Present “Safe Harbor” To Regulate Cryptocurrencies.
Though there is the general assumption that most “whales” in the crypto world are located in the US, the US policy on cryptocurrencies has been anything but encouraging, this is why, as many nations like China and Australia are prepping up for the crypto age, the US has continually clammed up on the issue, but all that is about to change now.
Judging by reports emanating from Washington, Hester Peirce, the US Securities and Exchange Commissioner, is said to have come up with a way whereby the thorny issue of how to regulate the digital asset, Hester Peirce is reported to be about presenting a new proposal on the subject.
According to those in the know, she plans to de-classify these blockchain-based digital assets as financial securities, at their early stages.
Besides cryptocurrencies like Bitcoin (BTC) and Ether (ETH) that are exempt from US securities laws, under the present laws, Initial Coin Offering (ICO) are classified as securities and this is considered a high risk especially taking into consideration that most of these ICO do not make it as projected.
Hester Peirce’s safe harbor proposal is reported to have taken care of this issue, according to insider comments, some breathing room will be given to companies that issue digital tokens to establish active networks and communities.
During last Thursdays International Blockchain Congress, held in Chicago, Hester Peirce said that she was recommending that companies that were offering ICO be given a three-year grace period to build their networks so that their token sale would reach appreciable levels of decentralization before being burdened with meeting regulatory requirements, at which point they may be classified as securities under the federal securities laws.
This latest proposal by Hester Peirce has been applauded by leaders in the crypto world and they all agree that this approach will actually help to regulate the cryptocurrencies industry, according to most of them, the approach is a welcome procedure that lightens the ICO process and will encourage US entrepreneurs and stem the tide of those taking their crypto-based businesses to other countries/governments with more friendly framework for cryptocurrencies.
The CEO of Binance, Catherine Coley, had this to say,“If adopted, the proposed safe harbor could be the most groundbreaking development for the US cryptocurrency market to date…
By putting development first and giving projects runway to build robust networks, the proposed safe harbor puts an important stake in the ground towards supporting American access and acceptance of digital asset markets. In the long run, it will help bring more Americans into digital asset trading and foster greater network participation.”
According to the proposal,
“The analysis of whether a token is offered or sold as security is not static and does not strictly inhere to the digital asset.”
Speaking on the subject, Blockchain Protocol Kokinos CEO, Steve Kokinos, said that the proposal was an important step for blockchain innovation.
“The blockchain industry and regulators need to continue a healthy dialogue for the US to truly become the global and responsible leader in blockchain innovation.”
The general counsel of institutional crypto custodian Anchorage, Katie Biber, had this to say
“We urge the Commission to move promptly to adopt it and to consider other innovative ways to increase investor choice in the digital asset space.”
It is expected that with the acceptance of Peirce’s proposal, strict rules for crypto and blockchain projects would be put in place, these rules will regulate the raising of capital via token sales, it is expected that the issue of personal disclosures will be address, it will be mandatory for source codes to be disclosed, investors must be well informed through adequate public announcements and the identities of the ICO team members must be made public.
The proposal sets a standard for “network maturity”
“The definition of Network Maturity [for a cryptocurrency] is intended to provide clarity as to when a token transaction should no longer be considered a security transaction but, as always, the analysis will require an evaluation of the particular facts and circumstances.”
