SEC Commissioner Hester M. Peirce proposed establishing a three-year safe harbor
from the securities laws, other than the anti-fraud requirements,
for the sale and trading of digital tokens that satisfy various
conditions.
Ms. Peirce argued that the application of the so-called
"Howey Test" to digital tokens has not worked as
a matter of law, in that applying the Howey analysis to
crypto has become over-inclusive, and has discouraged the
development of worthwhile applications of distributed ledger
technology.
Ms. Peirce proposed conditions that a token would be required to
meet in order to benefit from the exemption. These include:
- the token does not represent a financial interest in an entity
or any right to receive any ownership interest or the right to
receive any financial return, whether in the form of a share of
profits or revenue, or an interest-related return; and
