Hiro Systems Cleared by SEC After Long Probe, Crypto Industry Sees Victory

• SEC concludes a three-year probe into Hiro Systems, signaling regulatory relief for the blockchain firm.
• Hiro Systems transitioned the Stacks blockchain to a new consensus, claiming full decentralization in January 2021.
• Decision reflects broader regulatory trends favoring clarity in crypto compliance and innovation.

The U.S. Securities and Exchange Commission (SEC) has concluded a three-year investigation into Hiro Systems, formerly known as Blockstack as reported by Wu Blockchain on his X account. 

This decision comes after the company raised $70 million through token sales between 2017 and 2019, marking another favorable outcome for the crypto industry amid ongoing regulatory scrutiny.

The investigation’s closure was confirmed in a recent filing, signaling a positive shift for Hiro Systems PBC. According to the SEC’s Division of Enforcement, they do not currently intend to recommend enforcement action against the company. 

This move follows similar recent decisions by the SEC regarding other crypto entities, including stablecoin issuer Paxos, reflecting a broader trend of regulatory easing in the digital asset space.

Hiro Systems specializes in blockchain software development, particularly tools for building decentralized applications on the Stacks network, a layer-2 blockchain designed to complement Bitcoin. 

Founded by Muneeb Ali, a prominent figure in the crypto community, Hiro Systems launched the initial version of the Stacks chain with its native token (STX) in 2018.

Initially, the company treated its tokens as securities and conducted token sales under various SEC regulations, including Regulation A+ and exemptions for accredited and international investors. However, as of January 2021, Hiro Systems transitioned Stacks to a new version with a revised consensus mechanism, asserting that the network had achieved full decentralization.

Despite this assertion, the SEC remained cautious, prompting an inquiry into the company’s compliance with securities regulations in September 2021. Friday’s filing marks the conclusion of this inquiry, alleviating a significant regulatory burden that had loomed over Hiro Systems for some time.

The SEC’s choice marks an important time for Hiro Systems and the wider crypto sector, suggesting regulators may become more open to new blockchain ideas. As this area grows, these changes could affect how investors and projects see digital assets in the future.