SEC Commissioner Peirce Says Crypto Guidance On Token Offerings Is Imminent
The U.S. securities’ market regulator, the Securities and Exchange Commission (SEC), is reportedly planning to offer guidelines clarifying at what point securities laws apply to cryptocurrency token sales.
The news came from an official with the agency who said that the watchdog’s staff was working on what she called “supplemental guidance.”
Speaking on Friday at the University Of Missouri School Of Law, SEC commissioner Hester Peirce said that the guidance aims at helping project teams establish “whether [or not] their crypto-fundraising efforts fall under the securities laws.”
Peirce, commonly referred to in crypto circles as ‘Crypto Mom’ for her positive sentiment about cryptocurrency and blockchain, noted that although there is the Howey test generally provides clarity on securities, regulators still “need to tread carefully” since not all token offerings compare to traditional securities offerings.
The Commissioner cited a CoinCenter report that explains that when a project raises capital raised from a decentralized token offering, that token may not be truly owned or as such, controlled by an individual or company.
According to Peirce, the decentralized tokens are different from traditional securities, which she noted, are wholly controlled by the respective issuers or promoters.
The commissioner added that the application of the Howey test has challenges of its own, especially when it becomes “overly broad.”
Although her remarks offer a glimpse of the potential direction on issues of token securities, Peirce avoided giving any leads on when the crypto community should expect the guidance.
Peirce’s comments are in line with those of William Hinman, the SEC’s director of corporation finance, who said in November that the agency would provide a “plain English” guidance tool for crypto developers.
According to Hinman, guidance would help projects know when and how tokens fall under securities.
And Peirce took time to also talk about crypto regulations, saying that though “ambiguity” is a problem, for now, it isn’t “all bad.”
She added that what the ecosystem perceives as delays in having regulatory clarity, could lead to there being “more freedom” that would allow for growth within the blockchain industry.
The SEC is reportedly also considering the feasibility of introducing new rules for the regulation of the crypto industry. This, Peirce said, would need to be done “without compromising the objectives of [U.S.] securities laws.”
It would, therefore, require that the commission protects investors, facilitates capital formation, and ensures “fair, orderly, and efficient markets.”
Noting that the SEC can sometimes be “impulsive” when it comes to crypto, Peirce argued that the commission “owes it to investors” “not to define their investment universe with [the SEC’s] preferences.”
The SEC, notably through chairman Jay Clayton, has previously said that most of the initial coin offerings (ICOs) were securities.
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.