SEC Clears Stacks and Hiro Systems After Lengthy Investigation

The U.S. Securities and Exchange Commission (SEC) has concluded its investigation into Stacks, a Bitcoin scaling network, and its original developer Hiro Systems. This closure, confirmed through a recent filing, marks the end of a scrutiny that began in 2021, even though Stacks contributors (formerly known as Blockstack) had claimed their token sale was SEC-qualified at the time.

The filing dated July 9, 2024, explicitly stated: “Hiro Systems PBC (‘Hiro’) was informed by the staff of the Securities and Exchange Commission (the ‘SEC’) that the staff concluded its investigation as to the Stacks Blockchain and that based on the information known to the staff as of that date, the staff does not intend to recommend an enforcement action by the SEC against Hiro.” This announcement was met with relief and a sense of vindication by Hiro Systems, which promptly shared the news in a blog post.

In the blog, Hiro Systems expressed its continued commitment to regulatory compliance and its mission to empower developers to innovate on the Bitcoin platform. “This outcome reaffirms our commitment to striving for faithful fulfillment of regulatory compliance and meeting our mission to support developers as they build and innovate on Bitcoin,” the company stated.

This positive resolution for Hiro Systems and Stacks mirrors a recent development involving Paxos and its BUSD stablecoin, which is issued in partnership with Binance. Like Hiro Systems, Paxos also received news from the SEC that the investigation into its activities with the BUSD stablecoin had concluded without any enforcement action.

These back-to-back declarations by the SEC may signal a broader shift in the regulatory landscape, suggesting a possible softening of the SEC’s stance towards certain aspects of cryptocurrency projects and their compliance efforts. This could potentially encourage more robust and compliant development within the crypto space, particularly for projects that engage directly with established regulatory frameworks.