Hiro, the basic development tool for Bitcoin L2, publicly announced on X on July 13 that the SEC will not take any further legal action against Hiro and Stacks.
New startups Hiro and Stacks specialize in building second-layer smart contracts and infrastructure tools for Bitcoin. They are companies focused on the technical needs of developers. Stacks has continued to expand and develop over the past few years, and now builds L2 covering Ordinals and BRC. -20, Runes, Stacks and the new sBTC Bitcoin asset coming soon.
What’s special about Stacks is that it extends the functionality of Bitcoin to more than just a cryptocurrency, but becomes the basis for decentralized applications (DApps) and smart contracts. Because Stacks is an ecosystem anchored in the first layer of Bitcoin, the smart contracts it brings to Bitcoin do not change any of Bitcoin’s features, including the security and stability that make it so popular.
Stacks dApps are open and modular, so developers can build on top of each other’s apps and produce functionality that wouldn’t be possible otherwise. Additionally, because Stacks uses Bitcoin as its base layer, everything that happens in the Stacks ecosystem is backed by the most secure blockchain possible.
SEC Models Ambiguous Regulatory Standards
On July 9, 2024, SEC Assistant Director Amy Gwiazda sent a notice to Hiro’s team informing them that the investigation was closed and that she would not recommend that the SEC pursue charges against Hiro and Stacks.
The content of the letter is as follows:
"We have concluded our investigation into Stacks Blockchain SF4470, and based on the information we currently have, we do not intend to recommend that the SEC Commission take any legal action against Hiro Systems PBC (formerly Blockstack PBC).
We made our decision based on the findings of the last paragraph of the summary of Securities Act No. 5310, which "should in no way be construed as indicating that the party is innocent or that no action will ultimately be taken." For information about Securities Act No. 5310, please see the website: http://www.sec.gov/divisions/enforce/wells-release.pdf. "
The SEC took three years to investigate. Even though securities laws still exist, it is obvious that the SEC has given up on filing lawsuits against technology companies as securities.
Bitcoin second-layer development tools strive for compliance
Notified of the findings, Hiro said on X:
“On July 9, 2024, the SEC Committee notified us that it had concluded its investigation and did not intend to recommend that the SEC take enforcement action. Considering the current state of regulatory blockchain technology in the United States, this is the best outcome that any of our similar technology companies can hope for. . This result reaffirms our commitment to regulatory compliance and our mission to support developers building innovation on Bitcoin.
Starting in January 2021, after Stacks launched the Mainnet mainnet, the SEC launched an investigation into Hiro and Stacks blockchain technology. Over the past three years, the Stacks team has provided all relevant information to the SEC and worked hard to explain how the Stacks network operates and Hiro’s role within it. We pride ourselves on being a Bitcoin developer-focused company, and our tools have continued to evolve over the past few years.
We support developers’ belief in the need for Bitcoin L2 to create a clear path and regulatory framework in the United States, and we look forward to continued opportunities to help shape policy to meet the needs of builders of open innovation protocols. The results of Hiro and Stacks’ survey give us hope for a bright future for Bitcoin and the next generation of the web. "
The SEC’s scale remains vague and slow.
Well-known Bitcoin commentator Nathaniel Whittemore said on the show: "The U.S. Securities and Exchange Commission dropped its three-year investigation into the Stacks ecosystem. This is a good result, but the cost is ridiculous, which just shows the SEC's How counterproductive and slow the enforcement regulatory strategy is."
The SEC always has several standards for whether blockchain is a technology or a security. This time, it took a liberal approach to the Bitcoin second-layer ecosystem Stacks and adopted a loose policy. Even the same interpretation of Securities Law No. 5310 was rejected by the reviewers. Comparing the SEC's ruthlessness towards XRP, there are really some joys and some sorrows. XRP claims to be a blockchain technology company, but the SEC is clinging to XRP like a vicious evil spirit. The lawsuit between the two institutions has not yet concluded. However, it can be seen that the SEC cannot grasp the scale and standards of the company as it goes along.
This article SEC will not take legal action against Bitcoin second-layer ecosystem Hiro and Stacks first appeared on Chain News ABMedia.
