House Republican, SEC Commissioner Partner on Token Sales Policy

Representative Patrick McHenry (R., NC), the top Republican on the House Financial Services Committee proposed a bill Tuesday that would allow for startups in the cryptocurrency space to fundraise through token sales, bypassing current securities laws. 

The Clarity for Digital Tokens Act of 2021 looks to provide a “safe harbor for startup digital asset projects, while maintaining important investor protections,” according to a press release from McHenry’s office. 

The bill supports US Securities and Exchange Commission (SEC) Commissioner Hester Pierce’s Token Safe Harbor Proposal, originally introduced in February 2020 and re-introduced with updates in April 2021. 

“The safe harbor seeks to provide network developers with a three-year grace period within which, under certain conditions, they can facilitate participation in and the development of a functional or decentralized network, exempted from the registration provisions of the federal securities laws,” Pierce’s statement read. 

McHenry’s bill, if passed, would amend the Securities Act of 1933 and allow crypto development teams to sell tokens without registering them as securities for a period of three years. 

“The U.S. should be a global leader, not a global follower, when it comes to digital assets,” said McHenry in the statement. “Unfortunately, our current regulatory framework threatens to push this technology—and the jobs created by this rapidly growing industry—overseas.” 

The news comes as SEC Chair Gary Gensler, who has previously expressed concern over cryptocurrencies and their role in the broader financial landscape, said that the US will not be banning cryptocurrencies. 

During a House hearing Tuesday, Gensler was asked if he had any intention of following China’s lead when it came to digital asset regulation. 

“Our approach is really quite different,” Gensler said. 

The SEC head also pointed out that any ban would have to come from congress. 

McHenry also released a letter to Gensler on Tuesday, requesting that the SEC clarify the digital asset policy agenda. 

“You have made a series of concerning and apparently self-contradicting public statements regarding crypto assets and other innovative technologies,” the Congressman wrote in the letter. “I request that you clarify these comments promptly to avoid further confusion in the marketplace.” 

Gensler has not yet publicly addressed the letter.