US SEC’s ‘Crypto Mom’ Calls For Public Input To Help Define The Regulatory Treatment of Cryptocurrencies
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US Securities and Exchange Commission’s (SEC) Commissioner Hester M. Peirce — also known as “Crypto Mom” for her support of the crypto industry — recently made headlines by issuing a statement titled “There Must Be Some Way Out of Here.” The statement caught the eye of the public as it invited US citizens to provide their views on how to define the regulatory treatment of crypto assets.
Many have taken this as a very positive step for the industry, as it shows a renewed push to clarify the regulator’s approach to digital currencies. One of the biggest issues to tackle is the SEC’s stance that all cryptos are securities under federal law, which is now being brought into question.
SEC Seeks Public Input On Multiple Complex Questions
According to Peirce, the main concern revolves around the lack of clear classification for digital currencies. She acknowledged that there are complexities involved with applying the Howey Test, which has been used in the past to determine whether an asset is a security. She openly stated that market participants have expressed concern over the use of the Howey test, which is difficult to apply consistently.
Instead, her new proposal suggests a four-category taxonomy that would split crypto into assets that are inherently securities, assets that are sold as part of an investment contract but may not be securities, tokenized securities, and all other assets that don’t fit the previous three categories.
With that said, Peirce is asking for public feedback over this new classification, whether it provides regulatory predictability, and whether new disclosure rules should be tailored to crypto offerings.
Commenting further on her document, she said that the input it requires could bring clarity regarding the matters that even the dedicated crypto task force has been struggling with.
The questions that the SEC is hoping to get the answers for include how should crypto assets be defined and classified; should the Commission establish safe harbor provisions for blockchain projects; how can token issuers comply with disclosure requirements outside of using outdated frameworks; whether stablecoins, NFTs, and wrapped tokens should fall under the SEC’s jurisdiction; and what rules should govern exchanges and secondary market trading.
