Crypto Firms Should Get Behind Peirce's Safe Harbor Proposal, Even if It's Unlikely to Become Law

Published on by Coindesk | Published on

Addison Yang is a regulatory consultant at Luminous Group, where Van Cleef is also CEO. Peirce's CoinDesk op-ed about the safe harbor proposal is here.

It is very limited in scope, is only a rough draft and appears to have little to no chance of becoming law as Peirce's term as commissioner is scheduled to expire in June and no other commissioner has yet expressed support for the proposal.

Despite our skepticism, the proposal has attracted much attention and significant praise from the crypto community.

The important question is whether the crypto community should invest its time and resources in support of the Peirce proposal, given the odds against it.

Her enthusiasm may not be enough to move the proposal through the SEC.Without a doubt, as only one of five on the commission, which historically has been dominated by the chairman, Peirce's ability to influence consideration of the proposal is limited.

A decision to support the SH should be based on a good understanding of the proposal itself, how it accomplishes its objective and the potential consequences, both intended and unintended.

If a project team decides to facilitate secondary trading on a "Trading platform," the team is required to seek one that can "Demonstrate compliance with all applicable federal and state law and regulations relating to money transmission, anti-money laundering, and consumer protection." By requiring them to ascertain the regulatory status of the trading platforms, the proposal effectively requires projects to police the compliance efforts of the platforms.

Since the proposal exempts them from regulation as exchanges under the securities law, trading platforms for covered tokens are assumed by the proposal almost backhandedly to be regulated under money transmitter licensing laws.

Commissioner Peirce is encouraging discussion and feedback on the proposal.

If the community decides this proposal - or another - has value and ultimately should become law, it needs to engage both individually and collectively through industry groups and coalitions.

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