Legal Experts Urge SEC to Adopt Flexible Approach for Token Regulation

Legal experts have recommended a flexible approach for the Securities and Exchange Commission (SEC) to define tokens as securities. The DeFi Education Fund (DEF) submitted a letter on April 18 proposing five core principles for creating a “token SAFE harbor” framework. This framework aims to support decentralized finance initiatives while broader regulatory legislation is pending. The recommendations suggest a time-limited exemption for token projects developing toward decentralization, providing a regulatory environment that facilitates disclosure without prematurely classifying assets as securities. The DEF emphasized that any safe harbor should adopt a technology-agnostic approach, addressing the risks of activities rather than prescribing rules for specific blockchain models or technical implementations.