The US Securities and Exchanges Commission (SEC) has dropped its investigation into Bitcoin layer 2 Stacks and builder Hiro. This news comes right after the SEC stopped looking into Paxos for securities violations for issuing the Binance USD (BUSD) stablecoin this past week.

Many are celebrating these developments as the stringent financial regulator is appearing to let crypto projects breathe and not obstruct innovation through securities violation claims.

In a letter to the legal counsel representing the defendants, the SEC mentioned, “We have concluded the investigation as to Stacks Blockchain. Based on the information we have as of this date, we do not intend to recommend an enforcement action by the Commission against Hiro Systems PBC, formerly known as Blockstack PBC.”

Of course, the SEC included its typical “must in no way be construed as indicating that the party has been exonerated or that no action may ultimately result from the staff’s investigation” in its letter.

Hiro, formerly known as Blockstack, launched the earliest version of the Stacks layer 2 in 2018, alongside the STX token. The company continues to build software that assists developers in launching dApps on Stacks. It offered the STX token as a security under SEC guidance because it managed the Stacks chain, making the project centralized.

However, it moved away from managing Stacks as the layer 2 took on its decentralized form in 2021 by adopting a Proof of Transfer consensus mechanism during its mainnet launch. So, it claimed STX sales beyond that point were not securities offerings. The SEC soon commenced its investigation against Hiro and the Stacks blockchain.

Muneeb Ali, co-founder of Stack and board member for Hiro, posted on X, detailing how “Stacks did the first-ever SEC-qualified offering in 2019.” He further detailed that Hiro and Stacks cooperated with the SEC for over three years, providing “all requested information and worked to explain how the Stacks network works, and Hiro’s role as a developer tooling company.”