SEC commissioner Hester Peirce unveils updated version of 'safe harbor' proposal for crypto tokens

Hester Peirce, the crypto-friendly commissioner at the Securities and Exchange Commission (SEC), has formally unveiled an updated version of her proposed regulatory safe harbor for token sales.

In a public statement, Peirce said that the proposal "seeks to provide network developers with a three-year grace period within which, under certain conditions, they can facilitate participation in and the development of a functional or decentralized network, exempted from the registration provisions of the federal securities laws."

The updated version comes more than a year after Peirce originally put forward a proposed three-year safe harbor period for token sales, as previously reported. The update was also published on GitHub.

Peirce's statement highlights the change made the proposal: updated token purchaser protections requiring "semi-annual updates to the plan of development disclosure and a block explorer"; an "exit report requirement" that "would include either an analysis by outside counsel explaining why the network is decentralized or functional, or an announcement that the tokens will be registered under the Securities Exchange Act of 1934"; and lastly, that exit report requirement "provides guidance on what outside counsel’s analysis should address when explaining why the network is decentralized."


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"The guidance is not a bright-line test, but rather attempts to strike a balance between providing a manageable number of useful guideposts while maintaining sufficient flexibility for the facts and circumstances of each network to be considered in the analysis," Peirce went on to say.

In past statements and public appearances, Peirce has long lamented what she has described as inadequate regulatory clarity for companies and developers operating in the crypto space. That said, she expressed hope in a speech last month that 2021 would mark a "turning point" for the regulatory environment in the United States. 

Her updated proposal comes as former CFTC chairman Gary Gensler awaits final confirmation as chairman of the SEC by the Senate, an action that is expected in the coming days. Indeed, Peirce referenced the forthcoming leadership change in her statement.

"Now, as a new Chairman is coming into the SEC with a new agenda, is the perfect time for the Commission to consider afresh how our rules can be modified to accommodate this new technology in a responsible manner," Peirce concluded. "I invite the public to provide feedback on the updated proposal and look forward to the continued honest and open debate on how to address the issue."