The work to create crypto- and investor-friendly legal frameworks in the United States continues. Fortunately for the web3 community, they have friends in high places.
It has been almost three years since Hester Peirce, the commissioner of the US Securities and Exchange Commission (SEC), released her. UPDATED Token Safe Harbor Proposal 2.0 — but it’s not giving up.
Although the proposal has not made progress in its previous forms, the Commissioner is not giving up. “I think we would definitely need a version 3.0” if the government wants to keep crypto innovation alive in the US, he said. during an exclusive fireside chat with TechCrunch at Georgetown University’s McDonough School of Business.
“There is room for something that addresses the legitimate concerns that crypto-skeptics have while addressing the legitimate concerns of innovators,” Peirce added.
Previous versions of the proposal aimed to “answer the question that a lot of people have had,” about issuing tokens, Peirce said. He explained that he built an earlier iteration of the idea after the initial coin offering (ICO) boom in 2017, when many startups launched their own tokens and “there wasn’t a lot of disclosure around them.”
The safe harbor plan was intended to provide initial development groups with 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 if certain conditions are met ». according to a GitHub document.
Peirce’s proposal was intended to require people to make disclosures about the initial period they sold tokens. From there, the idea was that “if the blockchain was truly decentralized, so that no one had more information [i.e. insider information] from anyone else, disclosures would no longer be necessary because all the information would be out there and available to anyone.”
While the commissioner said she hasn’t released the details of 3.0 yet, she’s open to people throwing ideas her way. “I welcome ideas not just for 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’s unreasonable to expect a new token project to have the same kind of disclosures and legal understanding as a company that’s been around for 15 years and is going public, Peirce believes. “There’s just a real mismatch between the expectations that some people would like to place in these symbolic works and the reality,” Peirce said. “The result is that we end up with the worst of both worlds: We get no disclosure and we get companies to move out of the US.”
Crypto’s developer ecosystem continues to expand globally, with 74% of developers outside of North America, according to Maria Shen, general partner at Electric Capital. As a result, the share of active US blockchain developers fell to 24% last year, down from 40% in 2017 and down 5% from the year before, according to the company’s 2023 developer. report.
“I think the message that’s been sent is that it’s really complicated to do business in the U.S.,” Peirce said. “So a lot of people are looking elsewhere or wanting to do something different, and I think that’s problematic.”
Without clear rules, it will be harder for both startups and regulators to sort out what’s good versus bad “by the book,” he added.
“People spend a lot of time spinning their wheels thinking about regulation that they could spend thinking about what real things could be done with the technology,” Peirce said.
He joked that it would be “too optimistic” to assume that “a new day is dawning at the SEC” after the agency approved 11 issuers of spot bitcoin ETFs last month. But on the other hand, he added, “We have to be ready to go when that day happens.”
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