US authorities have been quite hostile towards crypto companies, which has made the lives of upcoming crypto start-ups quite difficult. In particular, the Securities Exchange Commission (SEC), has been quite tough on budding companies, especially those short on regulatory compliance. However, things could change very soon, as SEC Commissioner Hester Peirce recently proposed to create a safe harbor for a three-year period, as per which the apex finance regulator will grant new start-ups three years to achieve the level of decentralization from the date of the first token sale.
This proposal could infuse a breath in the ailing crypto markets and would allow young entrepreneurs to take the initial risks without worrying too much about regulations. Applauding the move, Binance CEO Changpeng Zhao tweeted that this is a significant step, and other countries will follow the footsteps of the US.
This is a significant step for US, and crypto around the world. Other countries will likely follow US' steps here.
Now we have China pushing blockchain and central bank coins, and US allowing crypto fundraising in a controlled fashion!
— CZ Binance 🔶🔶🔶 (@cz_binance) February 6, 2020
The move could also motivate SEC’s Indian counterparts, who have been at the throat of the crypto industry, causing a number of Indian crypto projects to fade away. Nischal Shetty, founder, and CEO of WazirX, India’s leading crypto trading platform, also commended the proposal. He said,
“Huge! What a smart proposal. Raise money through a token sale and you have 3 years to decentralise. Exactly what the Crypto ecosystem needs. This will encourage so much more development towards decentralised Internet.”
Speaking at the International Blockchain Congress 2020, on Thursday in Chicago, Peirce put forward the proposal, which can become a reality only after a majority of commissioners of the SEC approve it. Once approved, the burden of exuberant compliances would ease down, though the development team would be required to disclose the names, relevant experience, qualifications, attributes, and skills of each member, and the start-up would have to facilitate the analysis of specific facts and evaluation of circumstances. She further said,
“Admittedly, the liquidity condition may surprise observers of SEC staff positions in which attempts to facilitate secondary trading have been viewed as indicia of a securities offering. In the context of the safe harbour, by contrast, secondary trading is recognized as necessary both to get tokens into the hands of people that will use them and offer developers and people who provide services on the network a way to exchange their tokens for fiat or cryptocurrency.”