Caroline Crenshaw, the United States Security and Exchange Commissioner (SEC), has called for a “bridge” in which crypto firms would work with the regulatory Commission to determine their compliance plans.
In that case, Crenshaw has mentioned that the “safe harbor” proposal would have worsened the problems intensified during the initial coin offering (ICO) of 2017 and 2018.
The commissioner made her comments at an annual conference earlier this month but posted on the SEC website on October 12. In her speech, Crenshaw argues that the impact on investors and markets would have been far massive in case the safe harbor proposal was in place at the time:
“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 think it is not a coincidence that these problematic offerings pre-dated and continued through the beginning of a multi-year downturn in the value of digital assets, sometimes known as the crypto-winter.”
Hester Peirce, a crypto enthusiast, and SEC Commissioner, has always advocated for Safe harbor provisions that seek to grant network developers a three-year grace period to build a decentralized network without fearing the SEC’s legal action.
Peirce is referred to as “Crypto Mom,” by the crypto community. She tabled a revised version of safe harbor proposals earlier in March 2021, though not yet embraced by many other commissioners. Patrick McHenry, a Congressman of North Carolina House Representative, has followed the footprints of Peirce and put forward a similar three-year safe harbor in the “Clarity for Digital Tokens Act of 2021” draft bill.
In her latest sentiments, Crenshaw argues that rather than pushing the nascent crypto sector towards regulatory compliance, the safe harbor proposal would attract massive investors into further risk, as crypto firms would be locked outside the SEC jurisdiction for several years now:
“I also worry that relaxing regulatory requirements in markets prone to investor protection failures, limited investor redress options because of pseudonymity and disintermediation, and market manipulation, cannot sustain investor confidence or yield lasting broad adoption.”
Alternatively, Crenshaw has called for a “bridge” that enhances crypto firms to work jointly with the regulatory Commission to outline compliance or, rather discuss specific exceptions they feel inappropriate:
“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.”
“If you likely fall within our jurisdiction, work with us to describe your plan to comply or explain why some exemption is appropriate.”
Before summarizing her sentiments, Crenshaw reiterated SEC chair Gary Gensler’s earlier sentiment, who repeatedly called for crypto firms to work jointly with the regulatory Commission.
