SEC Drops Investigation into Bitcoin Stacks Developer Hiro

The US Securities and Exchange Commission (SEC) has concluded its three-year investigation into Hiro Systems, the company behind Bitcoin’s Stacks layer-2 blockchain. 

Hiro Systems, formerly known as Blockstack, raised $70 million through token sales from 2017 to 2019. Since its token’s launch in 2018, Hiro has considered its native token, STX, as a security under US law.

In a recent regulatory filing dated July 12, the SEC stated that it does not plan to pursue enforcement action against Hiro Systems. The company had been complying with regulatory requirements under Regulation A+, which applies to smaller securities offerings, as well as Regulation D and S for private and international offerings.

By 2021, Hiro argued that the Stacks blockchain had become sufficiently decentralized, negating the need for the company to treat Stacks Tokens as securities. They asserted that if Hiro was no longer essential for managing the blockchain, it was no longer necessary to consider the tokens as investment contracts under federal securities laws.

This marks the second crypto-related investigation the SEC has dropped this week. On July 11, Paxos revealed that the SEC had decided against enforcement action concerning its Binance USD (BUSD) stablecoin investigation.

Despite these developments, the SEC continues to pursue legal actions against companies like Ripple, Binance, Kraken, and Coinbase. Recent court decisions, including a landmark Supreme Court ruling in June, have restricted the SEC’s authority to enforce crypto regulations. The Supreme Court’s decision in Loper Bright v. Raimondo overturned the Chevron Doctrine, which previously granted regulators broad discretion in enforcing laws. Additionally, the SEC faced setbacks in its cases against Ripple and Binance in 2023 and 2024, respectively, with judges ruling against its claims of securities law violations.

Source: https://cointelegraph.com/news/sec-drops-investigation-bitcoin-stacks-developer-hiro-filing