Following a three-year investigation, the Securities and Exchange Commission (SEC) has concluded its investigation into Hiro Systems.
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 main focus of the SEC’s inquiry was whether Hiro Systems’ token sales broke any securities regulations. At first, tokens from Hiro Systems—formerly known as Blockstack—were offered for sale as securities.
The company used additional exemptions for accredited and foreign investors in addition to conducting sales under SEC Regulation A+, which allows limited securities sales to the public without registration.
Hiro Systems announced in January 2021 that the decentralization of the Stacks network was complete, meaning that its tokens do not need to be treated as securities. The SEC persisted in its investigation into the company’s operations in spite of this allegation.
“…the staff concluded its investigation as to the Stacks Blockchain and that the staff does not intend to recommend an enforcement action by the SEC against Hiro based on the information known to the staff as of that date,” the Commission said.
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 Paxos investigation’s conclusion, which suggests that stablecoins are unlikely to be regulated as securities in the US, is viewed as encouraging news for the cryptocurrency sector.
The Paxos ruling comes after the forceful regulatory actions taken in 2023 to categorize the majority of cryptocurrencies as securities. A change has occurred this year, though, with the SEC approving exchange-traded funds (ETFs), indicating a better future for the cryptocurrency market.