A member of the US Securities and Exchange Commission officially proposes a “grace” period for the token sales to allow companies to raise money without violating the Securities Laws. According to the proposal of Hester PEIRCE, crypto startups will have three years from the moment of their first token sale. The period gives startups time to achieve a decentralization level sufficient to comply with the Securities Laws. In addition, they need to pass the Howey Test.
If this proposal is approved by other members of the Commission, a clear plan of action and requirements for raising funds through the ICO will be developed. Despite the grace period, startups will be required to provide all the information that is necessary for token buyers, as well as ensure compliance with federal laws.
Developers are required to disclose personal information about work experience and qualifications, about the number of tokens available to each employee. Crypto startups will have to publish the source code, “tokenomics”, a roadmap, as well as information about previous token sales and transaction history. All of these requirements provide customer protection.
The SEC commissioner's proposal also includes the creation of an “initial development team” that will monitor the growth of the company for three years to determine if the company has reached “network maturity”. This will require an assessment of certain facts and circumstances.
In the crypto community, Peirce's proposal has been appreciated. Binance.US CEO Catherine COLEY has shared her opinion and called the SEC Secretary’s proposal the “most groundbreaking development for the U.S. cryptocurrency market to date.”
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