SEC aims to ease rules for digital asset firms

SEC Commissioner Hester Peirce announced that the agency is experimenting with a new order to allow companies using blockchain technology to issue, trade, and settle tokenized securities to operate with fewer registration requirements. 

Over time, the digital asset landscape has navigated a maze of regulatory hurdles, especially notable in the United States. The SEC has been at the forefront, actively scrutinizing various firms within the sector. Instances abound, such as hefty fines imposed on Wells Fargo and BNP Paribas for mishandling electronic communications.

In similar scenarios, Goldman Sachs faced penalties over a decade of incomplete trading reports, although this doesn’t relate to the digital asset space, while Binance battled accusations of breaching U.S. securities regulations, and firms like Coinbase and Kraken also felt the brunt of SEC actions. The SEC has now called off its legal actions against these crypto firms. 

The recent crypto-related action the SEC has dismissed was against crypto influencer Ian Balina, ending a three-year-long legal battle.

This landscape of stringent SEC monitoring has unfolded amidst a backdrop of ambiguous industry regulations. To foster a more accommodating environment for businesses and investors, the SEC is considering a shift away from its traditionally reactive and enforcement-heavy strategies towards a more proactive, rule-based approach.

According to a commissioner, the SEC is advocating for digital asset companies to operate lawfully without mandatory registrations as broker-dealers, clearinghouses, or exchanges. This initiative aims to cut costs and time for businesses while maintaining a high level of investor protection.

“This sketch of a potential exemption is a work-in-progress,” she said. “The goal is to formulate a commercially feasible approach that protects investors, including by ensuring that they have the benefit of cutting-edge technologies for trading, clearing, and settling securities.”

Beyond planning for smoother operations for digital asset companies in the US, the commissioner advocated for “bilateral collaboration to allow participants in foreign sandboxes simultaneously to run their market experiments in the United States.”

Hester noted that this approach will necessitate the exchange of regulatory details among the countries and businesses engaged. She pointed out that companies encounter more significant challenges expanding to meet the needs of global customers than when they concentrate solely on a single country’s market.

Furthermore, she encouraged both people and businesses to offer their input as the new regulations are developed.