SEC Drops Investigation into Stacks Bitcoin L2
The SEC has dropped its three-year investigation into Hiro Systems, the blockchain software developer previously known as Blockstack behind Stacks (STX), which raised $70M through token sales from 2017 to 2019.
What's the scoop?
- Started as Securities: When Hiro, formerly Blockstack, initially launched the Stacks chain and its STX token, these tokens were treated as securities with token sales conducted under SEC's Regulation A+, D, and S exemptions.
- Decentralization Claim: In January 2021, Hiro claimed the network had become fully decentralized and no longer treated STX tokens as securities.
- SEC's Response: The SEC was skeptical of this new definition, launching a probe in September 2021 to question Hiro's interpretation of its decentralization.
Bankless Take:
As the second investigation that the SEC has ditched this week, BUSD being the first, there are some exciting implications here. Having a token be initially classified as a security before becoming sufficiently decentralized highlights a new potential path for token classification and a legal recognition and legitimization of decentralization.
𝗡𝗘𝗪𝗦: SEC drops a three-year investigation into Stacks with no action.
— muneeb.btc (@muneeb) July 12, 2024
Earlier this week, we received word from the SEC that after 3 years, they are terminating their investigation into the @Stacks blockchain (the protocol) and Hiro System (a company) with no action.
Stacks…