By Michael Scott
The US SEC terminates the investigation into Stacks blockchain without enforcement actions to the Bitcoin scaling network.
The US Securities and Exchange Commission (SEC) closed the probe into Bitcoin scaling network Stacks alongside its developer, Hiro Systems. SEC confirmed the retreat in an official filing released on Friday to terminate the investigation of the Stacks Blockchain.
The filing references the July 9 termination notice served to Hiro Systems PBC that the SEC staff concluded the inquiry. The filing stresses that the staff harbours no intention to recommend enforcement actions against Hiro.
SEC Drops Three-Year Probe into Stacks
The investigations trace back to 2021 despite the claims by the contributors to the Stacks (then Blockstack) network that the token sale is SEC-qualified. The latest development on the case led Hiro Systems to applaud the SEC’s decision in its official post on Friday.
Hiro’s blog post touts the outcome, reaffirming its devotion to faithfully fulfilling regulatory compliance. The post assures compliance when supporting developers in building and innovating on the Bitcoin blockchain.
The Stacks announcement echoes the SEC retreat in the BUSD stablecoin issuer Paxos investigation a day earlier. Paxos’ official statement on Thursday confirmed the SEC’s move to conclude the investigation into the BUSD stablecoin without enforcement actions.
This week’s developments yield positive outcomes for Hiro as desired in the years-long investigation. The protracted legal tussle Hiro endured often devastates the defendants regardless of whether the probe results in charges.
A source privy to the matter spoke candidly of how the three-year-long investigation became insanely expensive and invasive to Hiro. The party that required anonymity decried the investigation as draining, with the annual costs exceeding seven figures.
The source likens Hiro’s interactions to the securities regulator mirror holding conversations with the brick wall. Efforts to seek comments from the SEC’s spokesperson were declined, indicating that the agency hardly commented more on the existence or non-existence of potential investigations.
Hiro’s blog post hails the survival unscathed by the agency often accused of regulating via enforcement. In particular, Hiro celebrates the SEC’s findings as opening a new chapter for the Stacks blockchain. Abandoning the inquiry yields optimism for Bitcoin and subsequent internet generation.
Vague Crypto Regulatory Framework
Notably, only a few crypto firms under SEC’s scrutiny walked away optimistically, such as Hiro. In particular, the leading crypto exchanges Binance, FTX, Coinbase, and Kraken have all bore the wrath of enforcement actions from the SEC.
In late 2022, blockchain publishing protocol LBRY confirmed folding operations following a two-year battle with the securities watchdog. The company attributed its closure to the legal and SE debts.
While Hiro Systems joins the select few crypto firms in avoiding securities-related charges, they must tread lightly. The termination of notice hardly implies that the Gary Gensler-led SEC precludes itself from levelling charges against Hiro in the future.
The absence of industry-specific rules to guide American crypto firms makes it likely that future products will attract the SEC’s scrutiny. It is an early call to rule out future products that would not incur the SEC’s wrath.
The party privy to Hiro’s encounters considers that the vagueness issue will remain until the US realises a clear regulatory framework.
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