Commissioner Peirce Proposes Token Safe Harbor For SEC and Industry Review

A way out of the 'regulatory Catch-22' for launching distributed networks?

In a February 6 speech at the International Blockchain Congress in Chicago, Securities and Exchange Commission Commissioner Hester Peirce introduced a proposed safe harbor designed to replace the existing uncertain and fraught regulatory landscape with a framework that offers token-based distributed networks some of the needed clarity and flexibility to launch a network, distribute tokens and support a network to maturity.¹

The safe harbor attempts to address what Peirce and other industry commentators have diagnosed as a "regulatory Catch-22" with regard to the application of securities laws to the development of distributed networks. Peirce described this problem as follows: "would-be networks cannot get their tokens out into people's hands because their tokens are potentially subject to the securities laws. However, would-be networks cannot mature into a functional or decentralized