SEC Ends Investigation into Bitcoin Scaling Network Stacks Without Enforcement Action
The U.S. Securities and Exchange Commission (SEC) has concluded its investigation into Stacks, a Bitcoin scaling network, and its original developer Hiro Systems, deciding not to pursue any enforcement action. This development, announced in a filing released on Friday, marks the end of an inquiry that began in 2021.
"On July 9, 2024, 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," the filing stated.
The investigation's closure is a significant relief for Hiro Systems, which faced scrutiny despite assertions from Stacks (formerly Blockstack) network contributors that their token sale had been "SEC-qualified." Hiro Systems emphasized their dedication to regulatory compliance and support for developers innovating on Bitcoin in a blog post.
"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. We’re proudly a developer focused company above all else—our tooling has evolved and grown over the last several years and now covers Ordinals, BRC-20s, Runes, Stacks, and soon, the new sBTC Bitcoin asset." the post read.
While the conclusion of the SEC's investigation is undoubtedly positive for Hiro, the process itself has been arduous and costly. A source familiar with the matter described the three-year-long investigation as "insanely expensive" and "super invasive," with annual costs exceeding seven figures. The source also noted that interactions with the SEC often felt like "conversing with a brick wall."
