Token safe harbor

The best-known version was proposed in 2020 by SEC Commissioner Hester Peirce and revised in 2021. It would give a project's team up to three years from the first token sale to build a functioning, decentralised network, provided they disclose key information about the project, the team and the token economics. If the network was not decentralised by the end of the period, the team would have to analyse whether the token is a security and register or restructure.

The idea responds to a dilemma: a token often needs to be widely distributed and traded to make a network work, but trading it while the founders still control the project can make it an investment contract under the Howey test. A safe harbor would avoid forcing projects to choose between illegality and not launching.

The SEC did not adopt the proposal under previous leadership. Since 2025, with a crypto task force led by Peirce and congressional market structure bills including their own maturity tests, exemptions of this type have returned to the agenda, though their final form is uncertain.