Vault12 tells SEC token safe harbor leaves exchanges unwilling to list VGT

Vault12 told the SEC that its proposed token safe harbor leaves exchanges unwilling to list older tokens, according to a comment letter the wallet-backup firm filed Tuesday. The letter was reported by CoinDesk.

Vault12 raised $17.45 million from 38 investors through agreements for future tokens in 2018, and its Vault Guardian Token has never traded on a centralized exchange, the letter says. The company is backed by Winklevoss Capital and Naval Ravikant. It argues its 2018 token sale fits the SEC's proposed exit path almost exactly: every commitment in its white paper has been fulfilled or formally abandoned, yet the token has never been listed.

The obstacle described in the letter is the risk that follows a listing. Venues Vault12 approached about listing VGT wanted assurance that the SEC would not later challenge the token's status, and the company argued the proposed safe harbor does not provide enough certainty for them to proceed. Exchanges considering a VGT listing repeatedly raised the same question, according to the letter: "How do we know the SEC won't later say VGT is still subject to the old investment contract?"

Regulation Crypto Assets, issued in August, would create exemptions for token fundraising and a conditional safe harbor for ending an investment contract associated with a token, according to the source reporting. To use the safe harbor, an issuer would have to complete or permanently stop the essential managerial efforts it promised, make no new such commitments and have no intention of doing so. It would also have to file a transition report, known as Form TR, explaining its conclusion.

The proposal also says the agency could challenge whether an issuer met the safe harbor's conditions. If a certification was inaccurate, the SEC could conclude that the investment contract had not ended and that securities-law requirements continued to apply. That is the outcome the exchanges described in Vault12's letter sought protection against before committing to a listing.

Vault12's concerns echo a comment letter from the industry group The Digital Chamber, which the company says it supports. The safe harbor remains a proposal rather than an adopted rule. Read together, the two letters argue that the framework's certainty has to exist before a venue agrees to list a legacy token, not after — a sequencing problem the SEC's text, on Vault12's account, does not resolve.