Crypto Industry Lauds Token Safe Harbor, But Warns of Risks

IT'S A START: SEC Commissioner Hester Peirce's safe harbor proposal is receiving measured praise.

Industry participants believe some kind of so-called "Safe harbor" is necessary, and praise Peirce's proposal for providing a reasonable plan for creating one.

Peirce's "Safe harbor" proposal would give crypto entrepreneurs a three-year grace period to launch and decentralize their projects before having to address whether their circulating tokens qualify as securities under federal law.

The proposal would have the added benefit of allowing a greater pool of investors to participate in a token sale, she said.

CoinDesk spoke to half a dozen industry lawyers and experts to examine the potential implications of the safe harbor proposal.

Peter Van Valkenburgh, director of research at industry think-tank Coin Center, told CoinDesk the proposal seemed both sober and reasonable, though he noted it does remain only a proposal at the moment.

"But because they're not, my fear is that they will see this safe harbor proposal as a means of further enriching themselves at the expense of U.S. token sale participants and the projects that list their tokens with these exchanges."

Crypto exchanges may also fall under tighter scrutiny under Peirce's proposal, as part of Rule 195 touts the importance of secondary markets for these new tokens.

To take effect, a majority of the SEC's commissioners would have to vote in favor of implementing the safe harbor proposal.

Peirce told CoinDesk that while her fellows are aware of her views on tokens and token projects, she has not yet gone to them directly with the proposal.