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SEC Commissioner Hester M. Peirce proposed an updated version of her
proposal for a three-year safe harbor from the application of
securities laws, aside from anti-fraud requirements, on the sale
and trading of digital tokens.
As previously covered, Ms. Peirce proposed the
following conditions for a token to benefit from the exemption:
the token does not represent a financial interest in an entity
or any right to receive any ownership interest or the right to
receive any financial return, whether in the form of a share of
SEC Commissioner Peirce Pitches Token Safe Harbor Proposal Version 2.0
SEC Commissioner
Token Safe Habor proposal.
Back in February 2020, Commissioner Peirce revealed her proposal in an effort to create a regulatory environment that supported Fintech innovation while acknowledging the unique characteristics of digital assets. Since the emergence of crypto-assets, the SEC has struggled to manage the new asset class that may have characteristics of a security while also having a utility quality. In the end, the Commission has defaulted to the decades-old Howey Test to regulate crypto and, at times, regulation by enforcement. Commissioner Peirce’s first version of a safe harbor for token offerings sought to accommodate the ability for a digital asset to morph into a utility over a period of time while creators worked on the network that used a native token.