SEC Commissioner Peirce Confirms Cryptographic Token Directives Are Imminent

The US Securities and Exchange Commission (SEC) is considering specifying when securities laws could apply to sales of encryption tokens, a senior official said Friday.

In one speech Hester Peirce, one of the SEC commissioners, told the University of Missouri's Faculty of Law that the agency's staff was working on "additional guidelines" to help projects determine "whether their efforts to collect funds are subject to securities laws ".

While the Howey test – the US standard for determining whether a security is a security – generally provides clarity, there is a "need for caution", as symbolic offers do not always resemble traditional value offerings.

For example, capital generated by decentralized token offers could mean that they are not actually owned or controlled by a corporation or person, unlike traditional securities controlled by issuers or developers, Peirce explained, citing a report from Coin Center.

The application of the Howey test can also be "too broad," added the commissioner. She did not give any idea as to when the guidelines could be published.

In November 2018, William Hinman, the SEC's director of corporate finance, also stated that the regulator intended to issue "plain English" instructions to developers on when and how how to clbadify encryption tokens as titles.

Peirce went on to argue that "ambiguity is not a bad thing" and that delays in clarifying regulation may, in fact, leave "more freedom" for blockchain technology to develop and to mature projects.

The Commissioner added that the SEC was also considering the need for new rules to regulate the cryptographic space, adding:

"If we act appropriately, we can allow innovation on this new frontier to progress without compromising the objectives of our securities laws: protecting investors, facilitating capital formation and ensuring fair markets, orderly and efficient. "

Peirce argued that the SEC can sometimes be "impulsive" in dealing with cryptographic projects and offers. "We need to help investors to be cautious, but we also have to not define their universe of investment according to our preferences," she said.

In July 2017, the SEC notably stated that securities laws could apply to some symbolic sales, after a review of the Ethereum The DAO-based project, which collapsed in 2016, losing $ 60 million from investors.

Hester Peirce image via CoinDesk archives