Most cryptocurrencies do not meet securities standards, says SEC Commissioner Peirce.
Plans include a safe harbor for startups and exemptions for token airdrops.
Clear rules needed to distinguish investment contracts from utility tokens for market clarity.
U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce has urged the SEC to provide clearer guidelines for the new digital asset market. Known in the industry as the "Crypto Mom," Peirce stated that most cryptocurrencies do not fit the standards needed to call them securities. This point came up during the SEC Speaks event when she said that rules need to be adjusted to account for the unique aspects of crypto tokens.
Clarifying What Constitutes a Security in Crypto
According to Peirce, tokens that do not grant users rights or interest in a business should not be overseen as securities. She explained that what tokens look like and how they are meant to be used affect their official classification in law.
The views expressed are in keeping with those who believe digital assets should be regulated in ways that fit their needs, rather than using the same set of securities laws for all. According to Peirce, tokens meant only to be used are very different from those intended for investing. The commissioner explained that the SEC Crypto Task Force has held more than 100 conversations with various industry players.
These talks aim to expand the agency’s understanding of the crypto market and manage related regulatory problems. She admitted that there are attempts to balance oversight with encouraging new ideas in the industry. She pointed out that it is essential to adapt, particularly when dealing with new assets such as meme coins and tokens distributed by airdrop.
Proposals for Regulatory Flexibility
Peirce suggested a system by which certain crypto projects could work without having to register as securities if they honor specific conditions. The point of this framework is to make sure new businesses understand the laws while keeping protections for investors. She suggested that a portion of airdrops could avoid being regulated as securities. Doing so would free emerging blockchain projects from doubt about legally distributing tokens.
The commissioner warned against leaving essential regulatory decisions to court rulings alone. She argued that the SEC must explicitly clarify when a crypto asset no longer qualifies as an investment contract. This clarity is crucial for secondary market transactions and the ongoing classification of digital assets. Peirce’s remarks reflect a call for regulatory certainty to help market participants understand their obligations and rights.
The SEC’s current approach recognizes the diverse nature of digital tokens. Peirce’s call for bespoke regulatory measures addresses the challenges posed by applying traditional securities law frameworks to evolving crypto assets. Her remarks emphasize a shift towards categorizing tokens based on economic realities and utility rather than solely formal structures. This approach may influence how future regulations shape the digital asset industry.
