SEC’s Hester Peirce still plans to push for symbolic ‘safe harbor’ plan


The work of creating crypto- and investor-friendly legal frameworks in the United States continues. Luckily for the Web3 community, they have friends in high places.

It’s been almost three years since Hester Peirce, a commissioner of the United States Securities and Exchange Commission (SEC), released her. update Token Safe Harbor Proposal 2.0 – but she’s not giving up.

Even though the proposal has not progressed in its previous form, the commissioner is not giving up. “I think we would definitely need a 3.0 version” if the government wants to maintain crypto innovation in the United States, she said. during an exclusive fireside chat with TechCrunch at the McDonough School of Business at Georgetown University.

“There is room for something that addresses the legitimate concerns of crypto-skeptics, while also addressing the legitimate concerns of innovators,” Peirce added.

Previous versions of the proposal aimed to “answer the question that a lot of people had” about issuing tokens, Peirce said. She explained that she built an earlier iteration of the concept after the initial coin offering (ICO) boom of 2017, when many startups launched their own tokens, and there was “no not much disclosure around them.”

The safe harbor plan was intended to give initial development teams a three-year grace period during which they could participate and build a decentralized network, and be exempt from the “registration provisions of the federal securities laws as long as certain conditions are met.” according to a GitHub document.

Peirce’s proposal aimed to force people to make disclosures for the initial period in which they sold tokens. From there, the idea was that “if the blockchain was truly decentralized, so that no one had any more information [i.e. insider information] than anyone else, disclosures would no longer be necessary because all information would be available and accessible to everyone.

Although the commissioner said she has not yet laid out the details of version 3.0, she is open to people throwing ideas at her. “I’m supportive of the ideas not only on Token Safe Harbor, but more generally: If the SEC woke up tomorrow and said, ‘We want to take a more productive approach,’ what would the ideas look like? [and] where would we need to spend our time?

It is unreasonable to expect a new token project to have the same type of disclosures and legal understanding as a company that has been around for 15 years and is doing an IPO, Peirce believes. “There’s just a real disconnect between the expectations that some people would like to place on these symbolic projects and the reality,” Peirce said. “The result is that we find ourselves in the worst of both worlds: we get no disclosure and we force companies to leave the United States. »

The Crypto developer ecosystem continues to grow globally, with 74% developers outside North America, according to Maria Shen, general partner at Electric Capital. As a result, the share of active blockchain developers in the United States fell to 24% last year, from 40% in 2017, and fell 5% from the previous year, according to Developer 2023. ‘business. report.

“I think the message that’s been sent is that it’s really complicated to do business in the United States,” Peirce said. “So a lot of people are looking elsewhere or just looking to do something different, and I think that’s problematic.”

If there are no clear rules, it will be harder for startups and regulators to sort out what is good and what is bad “according to the rules,” she added.

“People spend a lot of time thinking about regulation, and could spend it thinking about what real things could be done with technology,” Peirce said.

She joked that it would be “very optimistic” to assume that a “new day is dawning at the SEC” after the agency approved 11 spot Bitcoin ETF issuers last month. But on the other hand, she added, “We have to be ready to go when that day comes.” »

This story was inspired by an episode of TechCrunch’s Chain Reaction podcast. Subscribe to the chain reaction on Apple Podcasts, Spotify or your favorite pod platform to hear more stories and advice from the entrepreneurs building today’s most innovative businesses.

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