In one of its first actions since signing a memorandum of understanding with the Commodity Futures Trading Commission (CFTC), the U.S. Securities and Exchange Commission (SEC) said it will interpret how “non-security crypto assets” are subject to federal securities laws.
In Tuesday’s SEC notice he said his interpretation of how to deal with crypto assets would serve as an “important bridge” as lawmakers in the US Congress consider market structure legislation that would codify how financial regulators oversee digital assets.
The commission said the interpretation would provide “a consistent taxonomy of tokens for digital goods, digital collectibles, digital tools, stablecoins, and digital securities,” discuss how a “non-collateral crypto asset” may or may not be considered an investment contract under the SEC’s jurisdiction, and clarify federal securities laws regarding “airdrops, protocol mining, protocol staking, and packaging of non-collateral crypto assets.”
“That’s what regulatory agencies should be doing: setting clear boundaries in a clear way,” said SEC Chairman Paul Atkins. “It also acknowledges what the previous administration refused to acknowledge – that most crypto assets are not themselves securities. It also reflects the reality that investment contracts can expire.”
As prepared by Atkins comments at Tuesday’s DC Blockchain Summit, “only one crypto asset class remains subject to securities regulation,” according to the interpretation, and that was “traditional securities that are tokenized.” The commission urged market participants to review the interpretation to “better understand the regulatory jurisdiction between the SEC and CFTC” over cryptocurrencies.
Related: SEC, CFTC sign memo to regulate cryptocurrencies, other markets in harmony
The SEC’s notice came as lawmakers in the U.S. Senate continue to negotiate the terms under which they can reach an agreement on the Digital Assets Market Structure Act. The legislation is expected to give the CFTC greater powers to oversee cryptocurrencies.
A shake-up of the SEC’s enforcement leadership is drawing criticism
On Monday, the SEC announced that the director of the law enforcement division, Margaret Ryan, resigned from the agency. Its chief deputy director, Sam Waldon, has been named acting director of enforcement.
In response to Ryan’s departure, former SEC official John Reed Stark he said “not a single person on the planet” believed the commission’s claims that the director of enforcement had prioritized investor protection and “refocused on holding individual wrongdoers accountable” within the agency.
“The SEC has abandoned its identity,” Stark said Monday. “It has transformed from a Wall Street cop into something much more disturbing: a regulator that acts less like a law enforcement agency and more like a concierge service for the country’s biggest financial players.”
Stark, a 19-year veteran of the regulator, was the founder and head of the SEC’s Office of Internet Enforcement, according to his LinkedIn profile.
Atkins, along with SEC Commissioners Mark Uyeda and Hester Peirce – all Republicans – remain the agency’s only three leaders on the panel, which is expected to consist of a bipartisan group of five members. As of Tuesday, U.S. President Donald Trump had announced no plans to appoint other commissioners to the SEC or CFTC, which had only one Senate-confirmed member.
Warehouse: The Clarity Act risks repeating Europe’s mistakes, a cryptocurrency lawyer warns