Crypto Industry Scores Major Win as SEC Drops Investigation of Bitcoin L2 Stacks and Builder Hiro

The US Securities and Exchange Commission (SEC) has dropped a three-year-old investigation into Hiro Systems, a blockchain software developer that raised $70 million in token sales from 2017 to 2019. This is a significant win for the crypto industry, which has been struggling with regulatory uncertainty.

Background of the Investigation

Hiro, formerly known as Blockstack, launched the first version of the Stacks chain, with its eponymous token (STX), in 2018. Early on, the company treated the tokens it sold as securities. It conducted a portion of its token sales under the SEC’s Regulation A+, which allows issuers to sell limited amounts of securities to the public without registering. Other tokens were sold under exemptions for securities sold only to accredited (Reg D) or international (Reg S) investors.

The Path to Decentralization

In January 2021, a new version of Stacks launched, with a new consensus mechanism (proof of transfer). To Hiro’s mind, the network had become fully decentralized. In an SEC filing that month, the company said it was no longer providing “essential managerial services to the Stacks Blockchain,” and therefore it was no longer necessary to treat Stacks tokens as securities.

However, the SEC was skeptical of that interpretation. In September 2021, Hiro disclosed that it was responding to an inquiry from the division of enforcement. Friday’s filing marks the end of that inquiry and, presumably, the removal of a sword of Damocles that had been hanging over the firm.

A Boost to the Crypto Market

The news comes as the crypto market has been suffering over the past couple of months. Expectations were high that the crypto market would rebound after the halving event, but that hasn’t happened yet. Bitcoin, the world’s most popular cryptocurrency, has been trading below $60,000 after hitting an all-time high in March.

However, with the SEC dropping its investigation into Hiro, the crypto market is likely to get a much-needed boost. This development, combined with Jerome Powell’s announcement that the Federal Reserve expects to reduce interest rates only once this year, could provide a positive catalyst for the market.

Alternative Assets Gain Traction

Meanwhile, alternative assets like gold and silver are gaining traction. Peter Schiff, a renowned economist and fierce Bitcoin critic, has been advocating for these assets as a safer haven. However, Schiff’s criticism of Bitcoin has been met with skepticism by the pro-Bitcoin crowd, who argue that his views are short-sighted and biased.

Conclusion

The SEC’s decision to drop its investigation into Hiro is a significant win for the crypto industry. It’s a signal that regulatory uncertainty is decreasing, and that innovative projects like Hiro are being given the green light to continue building the future of finance. As the crypto market continues to evolve, we can expect to see more institutional investment flowing in, and more innovative projects emerging. With the likes of NVIDIA Corporation, Block Inc., and Coinbase Global, Inc. leading the charge, the future of crypto looks bright.

The crypto market is likely to get a boost with the SEC dropping its investigation into Hiro.

The recent decline in the crypto market is temporary, and the market is likely to rebound soon.

Peter Schiff, a renowned economist and fierce Bitcoin critic.

Mt Gox’s announcement to start repayments in Bitcoin and Bitcoin Cash is a positive development for the crypto market.