While addressing students of law at the University of Missouri last Friday, Hester Pierce who is a commissioner with the SEC said that the agency was working on “supplemental guidance” so that they can help crypto projects determine when securities laws may apply to the sale of crypto tokens.
Pierce added that while the Howey test which is used in the United States to determine if an offering is a security or not does provide clarity, there is a need to tread carefully as token offerings don’t usually mirror traditional securities offerings.
Citing a Coin Center report Pierce gave the example of capital raised through decentralized token offerings which can mean that it’s not indeed controlled or owned by a person or a company, unlike traditional securities that are usually controlled by promoters or issuers.
Even though she did not provide an exact date on when the guidance may be issued she said that the Howey test could sometimes be “overly broad.”
Last November, William Hinman the director of corporation and finance at the SEC also said that the agency had intentions of releasing “plain English” guidelines. These rules will help developers to know when and how cryptocurrency tokens can be classified as securities.
Commenting on crypto regulation, Pierce went on to say that “ambiguity is not all bad.” Adding that the continued delays may in fact be good for the industry as they allow for “more freedom” for the blockchain tech to grow and its projects to mature.
She also mentioned that the agency was deliberating on whether new rules need to be put in place to regulate the crypto industry.
“If we act appropriately, we can enable innovation on this new frontier to proceed without compromising the objectives of our securities laws – protecting investors, facilitating capital formation, and ensuring fair, orderly, and efficient markets.”
However, she also did acknowledge that the agency can be too impulsive at times when dealing with cryptocurrency projects and offerings. Noting: “We owe it to investors to be careful, but we also owe it to them not to define their investment universe with our preferences.”