In February, United States Securities and Exchange Commission Commissioner Hester Peirce was asked to give her opinion on the SEC’s case against Telegram. She declined to comment at the time, as SEC officials do not speak publicly about ongoing enforcement actions. In late July, however, with the Telegram case settled, Commissioner Peirce gave a speech titled “Not Braking and Breaking” that pointedly questioned the approach taken by the SEC in the Telegram case. Concluding her remarks, Commissioner Peirce asked:
With this speech, Commissioner Pierce made a powerful case for re-examining the way in which securities regulation in the U.S. is applied to the sale and subsequent transfer of the digital tokens necessary for open blockchain networks to operate. There are a number of ways this can be accomplished, including through the creation of the “safe harbor” for crypto projects Commissioner Peirce proposed back in February this year. The safe harbor would give projects a three-year grace period before federal securities laws could potentially be applied to them. Were the safe harbor to be adopted by the full Commission, innovators seeking to establish decentralized open blockchain networks would have a lengthy period for their projects to gain community support before either potentially bearing the full burden of SEC compliance or demonstrating that such compliance is not necessary.
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