Contrary to her prior concerns about the downside effects of overregulating the crypto industry, Ms. Peirce said that the SEC's "unwillingness to take meaningful action" has actually "stifled" the industry.
In a speech at the Securities Enforcement Forum, Ms. Peirce analyzed the recent SEC guidance on digital assets, Ms. Peirce stating that its efforts to provide clarification have been generally unsuccessful. First, Ms. Peirce stated that the SEC staff's Howey framework probably would only be understood by a "seasoned securities lawyer." Specifically, while Howey has only four factors, the framework listed 38 considerations for determining whether a token offering is a securities offering.
Second, Ms. Peirce criticized the first token no-action letter, which gave the "false impression" that it was a "gray area of securities law." As previously covered, the company TurnKey had been seeking to tokenize gift cards. The letter gave the impression that the securities law is more far-reaching than it is, according to Ms. Peirce, because the token was "clearly not an offer of securities." Additionally, the letter highlighted non-dispositive factors and so, Ms. Peirce stated, "effectively imposed conditions on a non-security."
Third, Ms. Peirce stated the SEC Division of Investment Management letter for advisers and funds on digital assets failed to provide meaningful guidance. Ms. Peirce conceded that the letter outlined certain questions that advisers should consider when buying and holding digital assets on behalf of their clients. However, she stated that it did not clarify how advisers can remain compliant with the Custody Rule.
Finally, Ms. Peirce warned that lack of regulatory clarification will push innovation into other jurisdictions.
SEC Hester M. Peirce cautioned against any "blanket" classification of tokens and coins, stating that most are not securities, despite their appearance.
The SEC provided an "analytical tool" to help market participants evaluate whether federal securities laws apply to the offer, sale or resale of a specific digital asset.
The SEC Division of Corporation Finance granted no-action relief to a Delaware corporation from the registration requirement relating to offering and selling "tokenized" jet cards.