SEC commissioner Peirce dissents on Unikrn ICO action, says approach risks stifling innovation

Hester Peirce, a commissioner for the Securities and Exchange Commission, said Tuesday that she dissented with the agency's previously announced settlement with blockchain-powered e-sports startup Unikrn. 

As previously reported, Unikrn will pay the SEC a $6.1 million penalty and "permanently disable" its Unikrn Gold token following the settlement, with Unikrn neither admitting to or denying the SEC's findings. The agency said that Unikrn's 2017 ICO constituted an unregistered sale. 

In her dissent statement, Peirce noted that Unikrn was not accused of any fraudulent behavior, and that the action itself focused purely on a registration violation.

"Registration violations, even standing alone, are serious, and our enforcement actions can serve to deter such violations and protect harmed investors," she wrote. "We should strive to avoid enforcement actions and sanctions, however, that enervate innovation and stifle the economic growth that innovation brings. I believe that this action and its accompanying sanctions will have such consequences."

Peirce pointed to her proposed safe-harbor approach for token startups as an alternative approach to regulating nascent companies working in this area. 

"As I proposed earlier this year, a well-designed, narrowly tailored regulatory safe harbor would efficiently and effectively combine the Commission’s interest in protecting investors with developers’ ambition to experiment. Affording a company like Unikrn a three-year regulatory window within which to further develop and refine its platform—while still subjecting it to the antifraud laws—would provide benefits to token purchasers, token issuers, and the Commission," she wrote.

Ultimately, according to Peirce, actions like today's Unikrn run the risk of impeding innovative activities.

"By failing to challenge ourselves to experiment with new approaches to regulation, we, and those whose interests we are pledged to serve, risk surrendering the fruits of innovation. I respectfully dissent from the Commission’s actions today relating to Unikrn," she concluded.