February 10, 2020 at 10:25 am UTC · 3 min read
Last week, SEC Commissioner Hester Peirce (aka ‘CryptoMom’) formally proposed a “safe harbor” for fundraising by token sale. Intended to “bridge the gap between regulation and decentralization,” the proposal would essentially make ICOs legal – with certain requisites.
To find out more about this, CryptoSlate spoke to co-founder of Athena Blockchain and adjunct professor at NYC Law Drew Hinkes. Nominated as one of CoinDesk’s Most Influential People in Blockchain in 2017, Hinkes is also an attorney with Carlton Fields as part of its National Blockchain and Digital Currency practice. Here’s what he had to say.
SEC Commissioner Hester Pierce’s proposal is ‘significant’
How important is this safe harbor proposal and what does it mean for the development of the space? Hinkes confirms:
“It’s significant. Although one Commissioner’s thoughts alone do not create the law, they do indicate that the SEC is taking the industry seriously and that some in the SEC are considering practical solutions to the complexities associated with selling tokens to raise funds to build functional networks.”
“Although it’s unclear if adopted, this rule could signal a policy shift from “How do we apply the securities laws to protect consumers from token sales?” to “How do we allow networks to develop into their functionality and use for non-speculative purposes without the securities laws getting in the way? Until it’s adopted as a Rule, however, it remains one Commissioner’s proposal.”
‘Getting through’ being a security to develop a product
The proposal would allow issuers to sell tokens without coming into conflict with securities laws,