The US Securities and Exchange Commission (SEC) is known for their strict evaluation of many cryptocurrency exchanges. However, with the flourishing state of the cryptocurrency market, the authority wants to rally behind the innovation that could take the financial sector to the next level. In a unique turn of events, the SEC’s tech startup branch will be going on tour to meet with potential entrepreneurs in the crypto space.
The branch, which has been named FinHub, recently posted an announcement to the official website for the SEC last week. The posting said that FinHub will be going to several major US cities, making themselves accessible to individuals and teams for questions and feedback, primarily regarding the issuance of tokens and other activities that the SEC approves.
On March 26th, the first stop will be in San Francisco at the local SEC office, but the new stop along the route will be Denver, Colorado. While the website indicates that there will be staffers available to answer questions about projects, the senior advisor for digital assets and innovation clarified that they cannot offer legal advice. Valerie Szczepanik, who is also the associate director of the Division of Corporation Finance, added that they will offer guidance while hearing about potential projects.
Previous issues with the enforcement actions of the SEC have mostly involved crypto startups that have reported their own potential securities violations. One project, Gladius Network LLC, ended up settling the charges without admitting or denying them, and there was no fine because the project turned themselves into the SEC on their own. However, the CoinAlpha startup was fined by the SEC for $50,000 after they held an unregistered securities offering. The company ultimately settled the charges, and there was no admitting or denying of the allegations.
The whole point of pursuing these meetings, which is called Local P2P on the FinHub website, aims to make it so that crypto startups have a “human face” on this authority. Szczepanik clarified that the SEC wants to be involved with people who are supporting innovation in the industry. She hopes to keep this opportunity going “at the local level,” since all startups and entrepreneurs cannot venture to New York and DC to speak with the SEC.
The SEC does not release the number of these startups that are seeking out the help of the SEC at this time, and there’s no information on the number of startups with meetings on the first day of the “tour.” However, there has been a few startups that have offered feedback on a Dalia Blass’s letter, directly from the Division of Investment Management. This letter will ban the launch of exchange-traded funds (ETFs) by firms, which gain their value from using crypto under the Investment Company Act of 1940.
Luckily, the interest in FinHub has been positive, and it looks like entrepreneurs are looking forward to the Local P2P approach. To read FinHub’s press release in its entirety, visit https://www.sec.gov/finhub.