Transforming Regulation in the SEC: Key Initiatives for Crypto Governance
As technology evolves, the U.S. Securities and Exchange Commission (SEC) must evolve alongside. The growth of the crypto market emphasizes the need for the SEC to update its outdated regulations, moving away from merely enforcing rules to providing guidance that encourages innovation while safeguarding investors.
1. Provide guidance on ‘airdrops’
The SEC should clarify how blockchain projects can distribute crypto rewards termed ‘airdrops’ without them being classified as securities offerings. These rewards are essential for project decentralization and the SEC’s guidance will prevent offshoring of ownership, securing interests of U.S. investors.
2. Modify crowdfunding rules
Revise the Regulation Crowdfunding rules to match the needs of crypto startups, allowing them to raise amounts comparable to their operational needs and ensuring that both accredited and non-accredited investors have access to opportunities.
3. Enable broker-dealers to operate in crypto
Removing restrictions on broker-dealers transacting with crypto assets will enhance market liquidity and participation. The SEC should enable their registration and establish compliance oversight.
4. Provide guidance on custody and settlement
Ambiguity in regulations has deterred financial institutions from engaging in crypto custody. The SEC must clarify rules to bolster confidence in investments, thereby enhancing market stability.
5. Reform ETP standards
The SEC needs to reform standards for exchange-traded products (ETPs) to encourage innovation and ensure broad market access for investors familiar with traditional portfolio management.
6. Implement certification for ATS listings
A streamlined certification process for crypto assets on alternative trading systems (ATS) will promote liquidity and allow investors to make informed decisions based on accurate disclosures.
By adopting these initiatives, the SEC can build a framework that fosters innovation, protects investors, and nurtures the burgeoning cryptocurrency market.
