SEC Commissioner, Hester Peirce, who is famous for her support of the crypto industry, clarified what could be the next line of action for the securities watchdog.
In a speech delivered to students of the University of Missouri School of Law, Peirce stated that the SEC is preparing to roll out a “supplemental guideline” that defines when ICO tokens are not a ‘security.’
According to her, such a framework will make it easier for projects to determine beforehand “whether their crypto-fundraising efforts fall under the securities laws.”
She went further to explain with an example, why all ICO tokens do not fall under the same category as traditional securities.
Decentralized crypto projects such as decentralized crypto exchanges (DEX) could decide to issue a token to raise funds for the development of the platform.
Now, while the issued tokens give users access to some features on the platform, the business is not managed by a single company or individual, a feature that is common with traditional securities.
Peirce used the illustration to point out that the SEC's use of the Howey Test to classify ICO tokens is broad and needs more simplicity before adding,
“We owe it to investors to be careful, but we also owe it to them not to define their investment universe with our preferences.”
However, the Commissioner failed short of giving a timeline on when the Regulators will release the said supplemental guideline.
SEC ‘Security’ Debate To Come To An End
Without a doubt, if the words of the Commissioner were to come true, then it would bring an end to a year-long debate between the SEC and crypto startups about which tokens should be ‘security’ under U.S laws.
The SEC has enforced regulatory actions against several crypto projects for failing to register their ICO tokens as securities, and have also faced criticisms for adopting such a rigid approach.
A 'supplemental guideline’ could be all that is needed to clear the air and probably allow the crypto innovation to thrive in the U.S.
Such a guideline will also likely provide a settlement to the ongoing case between crypto startup, KIK and the U.S SEC, as well as numerous projects under the regulatory hammer or the agency.
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