SEC Ends Investigation into Bitcoin Scaling Network Stacks Without Enforcement Action

SEC Ends Investigation Into Bitcoin Scaling Network Stacks Without Enforcement Action

The U.S. Securities and Exchange Commission (SEC) has concluded its investigation into Bitcoin scaling network Stacks and its original developer, Hiro Systems, deciding not to take any enforcement action. The development, announced in a filing published Friday, marks the end of an investigation that began in 2021.

“On July 9, 2024, Hiro Systems PBC (“Hiro”) was notified by the staff of the Securities and Exchange Commission (“SEC”) that the staff had completed its investigation of Stacks Blockchain and that, based on information known to the staff as of that date, the staff did not intend to recommend an enforcement action by the SEC against Hiro,” the filing stated.

The closure of the investigation is a significant relief for Hiro Systems, which has been under scrutiny despite claims by participants of the Stacks (formerly Blockstack) network that their token sales were “SEC-approved.” In a blog post, Hiro Systems emphasized their commitment to regulatory compliance and support for developers innovating on Bitcoin.

“This result reaffirms our commitment to faithfully adhering to regulatory compliance and fulfilling our mission to support developers as they build and innovate on Bitcoin. We are, first and foremost, a proudly developer-focused company; our tools have evolved and grown over the past few years and now include Ordinals, BRC-20s, Runes, Stacks, and soon the new sBTC Bitcoin asset,” the post reads.

While the outcome of the SEC’s investigation was undoubtedly positive for Hiro, the process itself was challenging and costly. A source familiar with the matter described the three-year investigation as “insanely expensive” and “extremely invasive,” with annual costs exceeding seven figures. The source also noted that interactions with the SEC often felt like “having a conversation with a brick wall.”