Securities and ExchangeCommissioner Hester Peirce, often called ‘Crypto Mom’ because she is the only commissioner with a favorable attitude towards crypto, has proposed a three-year safe harbor for crypto token projects such as initial coin offerings (ICOs). 

At this time, crypto token projects and ICOs need to seek approval from the SEC before launching, but the SEC has basically not approved any ICOs, stifling innovation in the crypto space.

What Commissioner Peirce proposes is that crypto token projects are given three years to mature before they have to deal with securities regulations. The thinking is that, in three years, a crypto token project could become sufficiently decentralized so that it is no longer considered a security. 

For example, Ethereum (ETH) started as an ICO but eventually became decentralized enough that the SEC does not consider it a security. If Ethereum (ETH) tried to launch today, it would be stopped by the SEC, and it is possible the Ethereum (ETH) ecosystem would have never come into existence. 

This proposal could re-spark innovation and activity in the crypto space; however, it seems unlikely that the SEC would ever approve this proposal, considering the angency’s history regarding crypto.