According to notes with the proposal, “The analysis of whether a token is offered or sold as a security is not static and does not strictly inhere to the digital asset.” If adopted, the proposal would allow companies to sell tokens that might otherwise be deemed as a security at launch but later mature to the point where they no longer are, hence the three-year grace period.

While providing a grace period, the proposal would not eliminate other requirements. Token offerings would still be required to provide adequate disclosure as well as having to comply with anti-fraud provisions in federal securities law.

The assessment guide in the proposal also includes the establishment of an “initial development team” that would monitor growth in the company during the three years that would decide whether the company has reached “network maturity.”

“The definition of Network Maturity is intended to provide clarity as to when a token transaction should no longer be considered a security transaction but, as always, the analysis will require an evaluation of the particular facts and circumstances,” the proposal states.

The proposal has been well-received in the crypto community. Catherine Coley, chief executive officer of Binance U.S., told Cointelegraph that the proposed safe harbor could be the “most groundbreaking development for the U.S. cryptocurrency market to date.”

“By putting development first and giving projects runway to build robust networks, the proposed safe harbor puts an important stake in the ground towards supporting American access and acceptance of digital asset markets,” Coley added. “In the long run, it will help bring more Americans into digital asset trading and foster greater network participation.”

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