SEC Commissioner Caroline Crenshaw called for a “bridge” in which crypto firms work with the SEC to determine compliance plans instead of a safe harbour. The “safe harbour” plan, would’ve made ICO problems worse she says.
Crenshaw made the statements during the SEC’s annual “Speaks” event earlier this month, and her address was uploaded on the SEC’s website on Oct. 12.
The Commissioner claims that if safe harbour regulations had been in force at the time, the impact on investors and markets would have been substantially greater:
“I think the results would have been even worse for investors and the markets. ICOs and other digital asset offerings raised billions from investors, but most never delivered on their promises. Investors suffered the losses.”
“And I don’t think it’s a coincidence that these troubled offerings pre-dated and proceeded through the start of a multi-year decline in the value of digital assets, dubbed the crypto-winter,” she added.
Hester Peirce, a crypto-friendly SEC commissioner, has pushed for the safe harbour concept. Most of the other commissioners have yet to support the idea, which wants to give network architects a three-year grace period to establish a decentralized network without fear of SEC legal action.
Peirce, also known as “Crypto Mom,” presented a new version in March of this year. North Carolina House Representative Patrick McHenry has proposed a three-year safe harbour in a draft measure called the “Clarity for Digital Tokens Act of 2021.
Instead of driving the crypto sector toward compliance, Crenshaw claims that the safe harbour proposal would put investors’ money in danger because crypto tokens would be declared outside of the SEC’s jurisdiction for “many years.”
“I’m also concerned that loosening regulatory requirements in markets prone to investor protection failures, limited investor redress alternatives due to pseudonymity and disintermediation, and market manipulation will undermine investor trust and lead to long-term widespread adoption,” she said.
Instead of a safe harbour, Crenshaw proposed a “bridge” in which token issuers and other crypto companies collaborate with the SEC to develop regulatory compliance strategies or explore particular exemptions when they are deemed “suitable,” as follows:
“I believe that if market participants accept proactive responsibility for compliance, we can build a bridge that promotes innovation while preserving market integrity and providing the investor protections needed for these new markets to grow.”
“Work with us to describe your plan to comply or explain why some exemption is acceptable if you are likely to fall under our authority,” she added.
Crenshaw’s comments reflect those of SEC head Gary Gensler, who has repeatedly urged crypto businesses to cooperate with the agency and register with it.
