As new leadership prepares to take over the US Securities and Exchange Commission, a crypto advocacy group believes now is the time to revive a 2020 proposal, Blockworks has exclusively learned.
The DeFi Education Fund is asking the SEC to establish a “safe harbor” for token issuers, allowing them a limited registration exemption while they develop decentralized networks. It’s an idea Commissioner Hester Peirce first floated five years ago.
“The safe harbor protects token purchasers by requiring disclosures tailored to their needs, preserving the application of the antifraud provisions of the securities laws, and giving them an ability to participate in networks of interest to them,” Peirce said in a 2020 speech.
In a letter sent Friday to the SEC Crypto Task Force — a group established earlier this year to tackle how securities laws apply to digital assets — DeFi Education Fund executive director and chief legal officer Amanda Tuminelli said the group supports Peirce’s concept, and they have some ideas to flesh it out.
A safe harbor, Tuminelli said, will allow projects to safely operate “while the long-term legislation and regulatory processes play out.” Congress, Tuminelli stressed, should be responsible for addressing “broader market structure and jurisdictional issues.”
When establishing rules and policies for the safe harbor, regulators should be “technologically-agnostic,” Tuminelli advised.
“Given the vital role that the SEC plays in the U.S. economy and the fact that securities markets are constantly evolving due to ongoing innovation, the Commission must be wary of mandating specific, prescriptive requirements or formats that are unsuitable for new or emerging technologies,” the letter read.
In terms of which companies qualify for the safe harbor, the DeFi Education Fund suggests making sure the projects are or intend to be decentralized and are able to meet an “exit test.”
