News has surfaced that the U.S. Securities and Exchange Commission (SEC) may be softening their stance on cryptocurrency projects that previously operated without the correct compliance procedures.
The SEC’s Director of Corporate Finance, William Hinman, has announced that the SEC may issue what is known as “No Action” letters to crypto projects that initially ran ICO’s without proper compliance but now have a viable use case. Speaking at the SEC’s inaugural blockchain conference the FinHub Forum, Hinman said that the move demonstrates the “flexibility of the regulatory framework that [the SEC is] working with.”
The letters are intended to notify companies that they are no longer under scrutiny by the SEC and no further action will be taken against them. Each case will be dealt with on an individual basis and the letters remain enforced only so long as the project maintains compliance.
The project that spurred on the new approach was that of Turnkey Jet, a cryptocurrency project aimed at helping VIP customers book private jets. In April, the SEC issued its first and so far only No-Action letter to Turnkey Jet, under the provision that Turnkey Jet tokens were only used to help book aircraft and not for other purposes.
The No-Action letters will only be applicable to projects that began life before the SEC issued it’s DAO Report of Investigation in July of 2017. The report warned all operators of initial coin offerings (ICO’s) that their products could be classed as unregistered securities and would, therefore, be illegal.
Ripple’s XRP token and the ongoing ‘security’ debate
Ripple’s XRP token has long been the center of a debate regarding whether certain cryptocurrencies count as securities or not. Despite the project operating for several years now, the SEC is yet to offer regulatory clarity on its legal status.
With this new announcement from Hinman, XRP’s status may become more clear to investors. Ripple didn’t technically raise funds through an ICO for XRP but certain aspects of the project have brought about questions regarding whether or not its a security.
The move indicates a resolve by the SEC to begin cooperating more effectively with the cryptocurrency community and developing a future that benefits all involved.