A Proposed SEC Interim Safe Harbor Framework

We are pleased to share the below discussion draft of the “2025 Safe Harbor Framework,” which has been submitted to the SEC Crypto Task Force. This draft builds upon Commissioner Peirce’s Safe Harbor 2.0, proposing an interim regulatory approach intended to address current market needs while permanent rulemaking and legislative efforts are in progress.

This is the product of an effort by Sarah Brennan and The Decentralization Research Center together with a larger working group that includes representatives from 20+ crypto foundations, labs teams, venture capital firms, staking providers, advocacy organizations, and law firms, who share the position that incentivizing decentralization in policy will be critical to building a flourishing and sustainable blockchain in industry. 

The draft interim safe harbor framework introduces two complementary safe harbors: Rule 195, offering prospective regulatory clarity for new token distributions, and Rule 195T, providing retroactive and transitional relief for historical token issuances. Our objective is to fill the current vacuum in regulatory guidance and provide immediate, clear pathways for good faith actors who voluntarily opt into compliance in exchange for interim relief.

Recognizing the necessity of incentivizing broad opt-in, this interim framework has been intentionally designed with a wide funnel for eligibility. However, it attempts to carefully restrict the ability to exit the safe harbor’s reporting and compliance requirements, ensuring that only those projects meeting the set criteria can transition out of the interim framework. While the test included in the safe harbor is an initial discussion point, the conditions for exiting the safe harbor should include rigorous standards around network maturity, decentralization, and autonomy.

This interim framework is designed to remain in place until policy efforts provide definitive guidance on token taxonomy and a narrower, more permanent regulatory safe harbor structure is established. Our aim is to foster market integrity, technological innovation, and predictable administration while preparing the ecosystem for future and more long-lasting clarity.
In response to some of the questions posed in Commissioner Peirce’s There Must Be Some Way Out of Here and The Journey Begins posts, we propose an interim relief framework that solves ‘go to market’ for token projects while more permanent guidance is developed and is aligned with current legislative efforts. We call this framework the “2025 Safe Harbor Framework” and it consists of:  (1) Rule 195 – Prospective Relief and (2) Rule 195T Retroactive and Transitional Relief.

Terms appearing below in bold have the definitions set forth in the 2025 Safe Harbor Framework, which we have attached as a separate document. We have updated some defined terms and concepts to align those in FIT21.1

I. Safe Harbor Relief Types

1. Rule 195 – Prospective Relief

This safe harbor provides prospective relief for new distributions of Tokens on a transaction-by-transaction basis. Eligibility is measured at the time of the proposed distribution, contingent on the project meeting the requirements for a Qualifying Distribution.

These requirements include having an eligible Token with a use case on a Functional Network and not being subject to disqualification from using the safe harbor under paragraph (k), which deals with the composition of the Initial Development Group.

Our eligibility criteria ensure the safe harbor is being applied to Tokens2 that need network effects and to be in the hands of end users, instead of disguised fundraising and/or exclusively speculative use cases, by (i) limiting eligible Tokens to those which have a use case within a Network (which is intended to encompass a broader swath of concepts in line with FIT21’s ‘Blockchain System’); and (ii) ensuring there is live functionality for the Token