The proposed token relief by Securities and Exchange Commission (SEC) could positively affect crypto firms by providing regulatory clarity on digital assets. The recent decision by the SEC has created optimism within the crypto community.
The SEC may introduce clearer criteria distinguishing security tokens from true utility tokens. For example, tokens used for governance and security in decentralized finance projects and layer-2 scaling solutions will likely qualify for potential relief.
The SEC indicated that not all digital tokens are necessarily securities by issuing a no-action letter, which is pivotal for the crypto industry.
Firms that conducted ICOs during 2017-2018 ICO boom have strong argument for relief under the new proposal. However, the SEC would likely exclude companies deemed to have engaged in fraud or misled investors during their ICOs.
The new Chair at the SEC is taking a new approach to regulation, but implementing changes will take time. The SEC has invited crypto companies to provide input for the regulatory process.
The new Crypto Task Force of SEC led by Commissioner Hester Peirce, plans to examine and asses different types of emerging crypto assets. The task force will also spot areas outside the agency's jurisdiction, consider public comments and no-action request letters and examine recommending temporary prospective and retroactive relief for coin or token offerings.
The Crypto Task Force is considering recommending that the SEC modify existing paths to registration for new issuers interested in registering token offerings.
The response of SEC to a motion to dismiss may reveal the extent of its crypto-friendly stand, as the motion raises questions about the treatment of digital assets under federal law.
The agency may reconsider litigation and voluntarily dismiss complaints as a symbol that regulation by enforcement is done.
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