Yesterday was crypto day for US regulators and legislations. Securities and Exchange Commission (SEC) Commissioner Hester Peirce outlined her crypto plans, as the acting Chair Uyeda appointed members to the Crypto Task Force. On the commodities front, the Commodity Futures Trading Commission (CFTC) confirmed its shift away from regulation by enforcement. The House and Senate Committees that oversee the SEC and CFTC announced they planned to work together to rollout stablecoin and broader crypto regulation. The Senate hopes to have the GENIUS stablecoin Bill sponsored by Senator Hagerty on the President’s desk within 100 days.
Addressing the SEC crypto mess
In a statement from Commissioner Peirce she wrote, “It took us a long time to get into this mess, and it is going to take us some time to get out of it,” adding that “Throughout this time, the Commission’s handling of crypto has been marked by legal imprecision and commercial impracticality.”
However, the increased volume of exemptive relief, requests for no-action letters, and registration statements will take time to process.
She emphasized that while there’s a desire to give people the freedom to build interesting things, the SEC will not allow fraudsters to flourish. For investors, the freedom of choice comes with the risk of loss without bailouts.
The statement outlines ten specific areas that need addressing, including the status of crypto assets under securities laws.
The SEC is debating on whether to provide temporary prospective and retroactive relief for coin or token offerings, provided the issuing entity (or someone) is willing to provide some level of ongoing disclosures. What is a little confusing is how these tokens might be considered as “non securities” yet the issuer would not contest the Commission’s jurisdiction in the case of fraud.
Norton Rose Fullbright published a thought provoking piece also suggesting temporary steps while the details are being worked on.
Additionally, the Task Force will take a look at the Regulation A rules that cover the requirements for smaller issuances of securities, with those in the $20m – $50m range requiring either accredited investors or limits on the proportion of a person’s income. We’d observe that the latter point is protective, but also invasive and requires considerable compliance work. Crowdfunding rules will also be reviewed.
Other topics to be explored include:
- Special Purpose Broker Dealers
- Custody Solutions for Investment Advisers
- Crypto-Lending and Staking
- Crypto Exchange-Traded Products
- Clearing Agencies and Transfer Agents
- Cross-Border Sandbox.
A crypto friendly Task Force
Acting Chair Uyeda announced a raft of new appointments, including three relating to the Crypto Task Force.
Landon Zinda, Policy Counsel at advocacy group Coin Center for the past two years, has been appointed as Counsel to the Acting Chair and Senior Advisor to the Crypto Task Force. Before Coin Center, he spent almost two years at the Senate Banking Committee drafting crypto legislation.
Richard Gabbert was appointed Chief of Staff for the Crypto Task Force. Previously he was Counsel to Commissioner Peirce for seven years.
Taylor Asher becomes Chief Policy Advisor to the Crypto Task Force. He was formerly policy advisor to Commissioner Uyeda and is now his Senior Policy Advisor. Before working at the SEC, he was personal aide to Senator Hagerty who is the sponsor of the new Senate GENIUS stablecoin bill.
Meanwhile, the CFTC announced a reorganization of its enforcement division to stop “regulation by enforcement” and refocus on fraud.
