Hester Peirce, an SEC commissioner, also known as CryptoMom, has delivered a new speech in which it is considered important that the SEC should promote new crypto-innovation and relax its securities legislation. Its argument is based essentially on the fact that many brands serve functional purposes – an important justification for those who defend the concept of utility marks.
Security status may change
In her speech, Peirce recognizes that tokens, which originally act as investment contracts, can quickly become a functional part of a blockchain network. In addition, a blockchain project that starts as a central, capital-raising startup can quickly become a fully decentralized real-world platform. This allows the token a kind of metamorphosis or, as Peirce explains:
"If the tokens are not sold as investment contracts … they are not securities at all. Tokens that are sold for use on a functioning network, rather than investment contracts, are not covered by the definition of securities. "
This claim is also corroborated by SEC 2018 Secretary General Bill Hinman's speech, which pointed out that tokens can become securities. While the SEC may be able to be more forgiving of functional tokens, Peirce suggests that the SEC has "spoken differently" because of its enforcement efforts to date, which established that the tokens under review were indeed securities.
Crypto projects in danger
Unfortunately, according to Peirce, many legitimate projects can not survive the current state of securities legislation:
"It is possible that some projects just are not able to work under the existing … securities laws … I will not comment on … a particular project … but my antennas will rise if seemingly legitimate projects can not be carried out because of our Securities laws do not allow them to be implemented. "
It notes that the much-anticipated stable base was closed last December as the rules left no choice but to return its funds to investors. Kin, not mentioned in the speech, also expressed concern over the SEC's criminalization of crypto projects and found that dozens of projects were in jeopardy.
Since Peirce delivered her speech to an academic audience, her statements are unlikely to have a direct impact on the SEC's work. However, Peirce has previously been recognized for her pro-crypto stance, especially for ETFs, and it seems possible that her on-going efforts will feed into regulatory decisions.
Post source: Hester Peirce of SEC suggests that functional tokens are "no securities"
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