Work continues to create cryptocurrency- and investor-friendly legal frameworks in the United States. Fortunately for the web3 community, they have friends in high places.
It has been almost three years since Hester Peirce, commissioner of the US Securities and Exchange Commission (SEC), released her. updated Safe harbor proposal for tokens 2.0, but she won't give up.
While the proposal has not moved forward 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, and at the same time addresses the legitimate concerns of innovators,” Peirce added.
Earlier versions of the proposal were intended to “answer the question that a lot of people had” around issuing tokens, Peirce said. He explained that he created an earlier version of the concept after the initial coin offering (ICO) boom of 2017, when many startups launched their own tokens and “there wasn't a lot of disclosure about them.”
The safe harbor plan was intended to provide initial development teams with a three-year grace period during which they could participate and create a decentralized network, and be exempt from “the registration provisions of the federal securities laws as long as they certain conditions are met.” according to a GitHub document.
Peirce's proposal was intended to require people to make disclosures during the initial period in which they were selling tokens. From there, the idea was that “if the blockchain were truly decentralized, so that no one had more information (i.e. insider information) than anyone else, disclosures would no longer be necessary because all the information would be out there and available”. To anybody.”
While the commissioner said she has not yet presented the details of 3.0, she is open to people presenting ideas. “I welcome ideas not just 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 they be? would we need? Spend our time?
It is unreasonable to expect a new token project to have the same type of disclosure and legal understanding as a company that has been around for 15 years and is doing an initial public offering (IPO), Peirce thinks. “There's a real discrepancy between the expectations that some people would like to put on these symbolic projects and the reality,” Peirce said. “The result is that we end up with the worst of both worlds: we receive no disclosures and we have companies move out of the US.”
crypto's developer ecosystem continues to expand globally, with 74% of developers outside North America, according to Maria Shen, general partner at Electric Capital. As a result, the share of active US blockchain developers decreased to 24% last year, down from 40% in 2017, and fell 5% from the previous year, according to the company's 2023 developer. report.
“I think the message that's been sent is that it's really difficult 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, startups and regulators will find it harder to separate what is good and what is bad “according to the rules,” he added.
“People spend a lot of time thinking about regulation, time that could be spent thinking about what real things could be done with technology,” Peirce said.
He joked that it would be “very optimistic” to assume that “a new day is dawning at the SEC” after the agency approved 11 bitcoin spot ETF issuers last month. But on the other hand, he added: “We need to be prepared for when that day comes.”
This story was inspired by an episode of TechCrunch's Chain Reaction podcast. Subscribe a Chain Reaction in Apple Podcasts, Spotify or your favorite pod platform to hear more stories and advice from the entrepreneurs building today's most innovative companies.
Connect with us:
- On X, formerly known as Twitter, here.
- By email: [email protected]
