![]() ![]() However, for a network to mature into a functional or decentralized network that is not dependent upon a single person or group to carry out the essential managerial or entrepreneurial efforts, the Tokens must be distributed to and freely tradeable by potential users, programmers, and participants in the network. ![]() For example, sales of a particular Token likely would not constitute sales of an investment contract if purchasers could no longer reasonably expect a person or group to carry out the essential managerial or entrepreneurial efforts. A Token may be offered and sold initially as a security because it is wrapped in a transaction involving an investment contract, but the Token may later be offered and sold outside of an investment contract. The analysis of whether a digital asset is offered or sold as a security is not static and does not strictly inhere to the digital asset. It does not necessarily reflect the views of the Securities and Exchange Commission or my fellow Commissioners. This potential safe harbor is not a rule, regulation, or statement of the Securities and Exchange Commission. Proposed Safe Harbor – Time-limited Exemption for Tokens. I invite the public to provide feedback on the updated proposal and look forward to the continued honest and open debate on how to address the issue. Now, as a new Chairman is coming into the SEC with a new agenda, is the perfect time for the Commission to consider afresh how our rules can be modified to accommodate this new technology in a responsible manner. The guidance is not a bright-line test, but rather attempts to strike a balance between providing a manageable number of useful guideposts while maintaining sufficient flexibility for the facts and circumstances of each network to be considered in the analysis. Third, the exit report requirement provides guidance on what outside counsel’s analysis should address when explaining why the network is decentralized. The exit report would include either an analysis by outside counsel explaining why the network is decentralized or functional, or an announcement that the tokens will be registered under the Securities Exchange Act of 1934. Second, in response to concerns about the lack of clarity at what happens at the end of the three-year grace period, the safe harbor proposal now includes an exit report requirement. First, to enhance token purchaser protections, the safe harbor proposal now requires semi-annual updates to the plan of development disclosure and a block explorer. Three significant changes mark the updated version. ![]() There is, however, more work to be done, which is why I, as a believer in the value of drawing on decentralized knowledge, posted the safe harbor on GitHub. I am grateful for the thoughtful engagement and believe it demonstrates the need for regulatory clarity in this space. The updated version reflects constructive feedback provided by the crypto community, securities lawyers, and members of the public. The safe harbor seeks to provide network developers with a three-year grace period within which, under certain conditions, they can facilitate participation in and the development of a functional or decentralized network, exempted from the registration provisions of the federal securities laws. Earlier today, I released on GitHub, an updated version of the token safe harbor proposal that I originally suggested in February 2020. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |