SEC Ends Three-Year Investigation Into Hiro Systems
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The Securities and Exchange Commission (SEC) has ended its probe into Hiro Systems after three years of investigation.
According to a recent SEC filing, the regulatory body decided to drop its scrutinizing action against Hiro Systems, formerly known as Blockstack, which raised $70 million in token sales from 2017 to 2019.
SEC Drops Probe into Hiro Systems
The SEC’s investigation centered on whether Hiro Systems’ token sales were in violation of securities laws. Initially, Hiro Systems, then known as Blockstack, sold its tokens as securities.
The company conducted sales under SEC’s Regulation A+, which permits limited securities sales to the public without registration, and used other exemptions for accredited and international investors.
In January 2021, Hiro Systems declared that the Stacks network had completed decentralization, thus negating the need to treat its tokens as securities. Despite this claim, the SEC remained skeptical and continued its inquiry into the company’s activities.
“…the staff concluded its investigation as to the Stacks Blockchain and that based on the information known to the staff as of that date, the staff does not intend to recommend an enforcement action by the SEC against Hiro,” stated the Commission.
Stablecoins Unlikely to Be Securities
The SEC’s recent decision to end its investigation into Paxos’ BUSD stablecoin is another notable development in the regulatory landscape. This comes a year after the agency issued a Wells Notice to Paxos, raising uncertainties about the classification of stablecoins as securities.
The conclusion of the Paxos probe is seen as a positive sign for the crypto industry, indicating that stablecoins are unlikely to be regulated as securities in the U.S.
The Paxos decision follows the previous aggressive regulatory actions in 2023, which aimed to classify most cryptos as securities. However, this year has seen a shift, with the SEC approving exchange-traded funds (ETFs), suggesting a more favorable outlook for the crypto market.
