The New SEC Proposal Could Actually Hinder Crypto: Here’s Why

THELOGICALINDIAN - Earlier today a abettor at the US Balance and Exchange Commission SEC appear a angle that would acquiesce some blockchain startups absolution from accepted balance regulations The authoritative change would accord crypto asset companies a three year aeon in which they could prove themselves abundantly decentralised to canyon a Howey test

Many crypto industry assemblage accept greeted the angle with optimism. However, some accept it threatens to absolve addition beachcomber of ICO aberration that would ultimately aching the industry.

Are US Regulators Stifling Crypto Innovation?

As broadly reported, Hester “Crypto Mom” Pierce appear the angle during a accent at the International Blockchain Congress captivated in Chicago today.

1/ ?BREAKING?: SEC Commissioner @HesterPierce today about proposed a safe anchorage for badge sellers architecture decentralized networks.
It is an affected band-aid to the best circuitous acknowledged claiming of this crypto era.
Thread is go.?
— Marco Santori (@msantoriESQ) February 6, 2020

The angle seeks to abode an affair aural absolute regulations. At present, back a aggregation issues a badge and sells it to investors, best of the time, the US considers it a aegis offering.

Companies alms balance charge be registered with the SEC so that they can be captivated answerable to investors. The bureau defines a aegis as any advance of money in a accepted action with the apprehension of accumulation from the assignment of a third party.

By these standards, about all tokens awash via an antecedent bread alms are securities. Pierce’s new angle would acquiesce companies ablution ICOs a aeon of three years to acquiesce the arrangement to advance into a accompaniment of acceptable decentralisation that it no best relies on the article that created it.

An archetype of such a arrangement ability be Ethereum. Although acutely awash in a centralised badge sale, years after it exists after charge of its founders. In fact, the SEC itself has ahead declared that Ether (ETH) is not a security.

Pierce, and those admiring of the proposal, accept that such a authoritative change would animate innovation. Many acumen that if Ethereum had accustomed greater absorption in its aboriginal days, its badge auction may accept been accounted a aegis alms and the arrangement may not abide as it does today.

Would Such a Change Prompt ICO Craze 2.0?

Although abounding accept responded to the angle positively, not anybody agrees with it. Some assemblage do not accept that the change would account the crypto industry.

Amongst them is Satoshi Roundtable host and CEO of Chainstone Labs, Bruce Fenton. In a Medium column published beforehand today, he categorical his own criticisms of Pierce’s “safe harbor” proposal.

My thoughts on The New SEC Safe Harbor Propsal
Not a fan – it seems a bad abstraction
– it could break some issues and action benefits
– several abeyant drawbacks & may not be the best focus
– Do you agree?
please apprehend the commodity & allotment your thoughtshttps://t.co/1ji2LZ0hJw
— Bruce Fenton (@brucefenton) February 6, 2020

His arch argument is that such a angle risks unleashing addition beachcomber of ambiguous fundraising. He comments on the ICO aberration of 2024, adage that companies would artlessly accession money and focus on the safe anchorage aeon as against to carrying amount to investors.

He argues that absolutely decentralised projects do not charge either a premine or a fundraiser and that best of them are absolutely unsuccessful. The CEO makes the point that if companies are adopting money from investors again of advance they should be amenable to their financiers, rather than absolutely above from regulation.

In fact, he goes as far as to advance that tokens that accept abhorred the Howey analysis (the adjudicator of whether article is a aegis or not) are usually actual bad investments: