On Tuesday, acting SEC Chair Mark Uyeda announced the creation of a Crypto Task Force to devise a “sensible regulatory path” for the $3 trillion cryptocurrency market. This represents a departure from the former chair, Gary Gensler, whose SEC initiated numerous enforcement actions against the crypto industry issue tailored guidance.
Peirce chairs this new group, joined by Uyeda’s senior adviser, Richard Gabbert, and senior policy adviser, Taylor Asher. The working group’s focus will be “to help the Commission draw clear regulatory lines, provide realistic paths to registration, craft sensible disclosure frameworks, and deploy enforcement resources judiciously.”
The new task force comes amid Trump’s appointment of David Sacks as his “artificial intelligence and crypto czar,” and underscores broader political support for updated, innovation-friendly regulation. Peirce, for her part, has emphasized that effective rulemaking in a complex sector like crypto will take time.
The new commissioner is an advocate for innovation who remains mindful of legal boundaries. Often referred to as “Crypto Mom,” Peirce has spent much of her tenure critiquing “regulation by enforcement” and advocating for policies recognizing crypto’s distinct nature. Key themes from her prior statements and dissenting opinions include:
Commissioner Peirce has championed a Securities Act regulatory safe harbor for token issuers that would provide a three-year window during which blockchain-based projects can develop functionality or decentralize without immediate SEC registration for the crypto assets they sell to the public.
The idea—which was proposed in 2020, updated in 2021, and notably solicited comments via GitHub—represents only a concept, and no token-specific safe harbor has been advanced under formal SEC rulemaking. Reviewing the proposal’s core components, however, may signal the means to Peirce’s avowed policy goals of allowing companies to develop functional or decentralized networks while protecting token purchasers.
The basic premise behind the safe harbor is that tokens may be initially sold to fundraise the development of functional or decentralized software utilities for which the Securities Act disclosure regime is incompatible and unhelpful to tokenholders. The core aspects include:
One of the many complexities with the proposal is its approach to defining “network maturity,” which allows that a network is mature when it is either not centrally controlled or attains functionality:
The network is decentralized if it meets the following conditions:
The network demonstrates functional utility if it meets the following criteria:
The proposed definition of a token focuses on its recording method and transferability—hence, it would likely capture common fungible tokens such as those adopted under the ERC-20 standard as well as NFTs (e.g. ERC-721) and semi-fungible tokens (ERC-1155). However, a “token” under this framework would not include any financial interest in a company, partnership, or fund—including an ownership or debt interest, revenue share, entitlement to any interest or dividend payment.
Although she is undoubtedly the most crypto-friendly SEC commissioner, Peirce has consistently recognized that certain digital assets can indeed be sold as investment contracts. Examples include:
In short, Peirce does not advocate a regulatory “free pass” for all crypto activities—rather, she encourages clear lines along a path for innovation in decentralized technology.
While Peirce’s safe harbor is a good indicator of potential policy approaches, we will be closely following the statements and reports that emerge from the Crypto Task Force and other policymakers. A new regulatory framework will take significant time to establish. The SEC may wait until the Senate confirms nominee Paul Atkins to chair before moving forward with such momentous and politically sensitive rulemaking. But in the short term, the commission could judiciously employ no-action letters to establish the contours of a potential framework.
The SEC’s regulatory agenda will no doubt be influenced by related policy proposals from Congress, including potential iterations on the FIT21 market infrastructure legislation passed by the House of Representatives last session. Notably, the Crypto Task Force has a mandate to coordinate with the Commodity Futures Trading Commission and other federal agencies, which is consistent with FIT21 and other policy proposals that recognize the overlapping jurisdictions of the two commissions with respect to digital assets.
This presidential administration has unmistakably signaled it will pursue policies favorable to companies operating in the crypto asset space, but the specific policies and the path to implementing them remain unclear. Peirce has in the past emphasized the importance of input from industry, academics, and investors—and has demonstrated a willingness to engage with blockchain startups on their territory. In the coming year, companies may be able to find meaningful opportunities to provide comments and participate in industry roundtables.
Companies should watch for public comment periods and roundtables, where they can help shape regulations to meet practical needs while protecting investors. There may also be worthy opportunities to seek interpretive guidance from the SEC.
Fenwick will continue to monitor developments in this space. Check out the Fenwick Crypto Review hub for the latest news and insights in this fast-developing space.