Hester Peirce, the SEC commissioner who is also popularly known as ‘crypto mom‘ because of her in-depth understanding of the crypto space has come out with an updated token harbor initiative first introduced in February 2020, to help new crypto startups raise funds without worrying about regulatory clampdowns. The new token fundraising solution proposes a 3-year grace period for companies to produce a functional and decentralized platform or application before having to register with the agency. The updated version makes two key changes,
- Semi-annual updates to the plan of development disclosure and a block explorer.
- Exit report at end of the 3-year safe harbor – either an analysis by outside counsel explaining why the network is decentralized or functional or an announcement that the tokens will be registered with the SEC.
The crypto ecosystem has been quite cautious about raising funds in the US after SEC’s strict actions against Telegram, forcing them to repay nearly $1.6 billion to investors raised during the 2018 ICO. Apart from Telegram, Kik, and now XRP is also being sure by the SEC for $1.3 billion. All the three mentioned firms raised funds through a public funding program without registering with the SEC under securities law.
SEC Commissioner Had Voiced Her Concerns Over Lack of Clarity in Regulations
Peirce had earlier voiced her concerns over the lack of clarity in regulations by the SEC when it sued Ripple Labs for unregistered sale of security. Thus, it makes even more sense that the regulatory proposal has come from her.
She suggested that the newly updated proposal received healthy feedback from the crypto community and hoped that it gets the agency’s approval.
“I have already received valuable insights and feedback from the updated version of my token safe harbor proposal released on Tuesday. The enthusiastic engagement by the crypto community strengthens the case that the Commission must move forward in resolving a number of crypto-related issues.”
Would the New Fundraising Initiative Get SEC’s Nod?
While the newly proposed Token Harbor Initiative would surely come as a big relief for the crypto startups looking to raise funds in the US, however, looking at the current enforcements by the agency it looks quite difficult that Peirce’s updated initiative would get a nod.
SEC commissioner could find an ally in the newly appointed SEC chief Gary Gensler who is seen as a pro-crypto personality, given he has been teaching about Blockchain and Bitcoin to MIT students. Gensler’s appointment is also being seen as a positive note for the ongoing SEC vs Ripple Labs lawsuit.