SEC and CFTC issue new guidance on how securities laws apply to crypto assets
On Tuesday, the US Securities and Exchange Commission, together with the Commodity Futures Trading Commission, issued an interpretation clarifying how federal securities law applies to crypto assets, a first step toward developing a clearer regulatory framework.
The interpretive guidance introduces a token taxonomy for different types of cryptocurrencies, with SEC Chairman Paul S. Atkins adding that “most crypto assets are not themselves securities.”
Examples of a digital commodity, “a crypto asset that is intrinsically linked to and derives its value from the programmatic operation of a crypto system that is ‘functional,’” include:
Aptos, avalanche, bitcoin, bitcoin cash, cardano, chainlink, dogecoin, ethereum, hedera, litecoin, polkadot, shiba inu, solana, stellar, tezos, and XRP.
The guidance also includes definitions of digital collectibles (such as NFTs), stablecoins, digital tools, and digital securities (such as tokenized real-world assets and stocks).
This is a monumental step in the mainstream adoption of the industry and clears a hurdle in how crypto can operate going forward, according to David Pakman, head of venture investments at CoinFund. “This will allow new token designs with the confidence that their existence does not require registration with the SEC, etc.,” Pakman told Sherwood News.
Despite the clarification efforts from the two organizations, the market capitalization of the crypto industry has dropped about 2% in the last 24 hours as each of the tokens mentioned in the guidance are trading lower in the period, data from CoinGecko shows.
The joint agency action also complements congressional efforts to turn a crypto market structure framework into law. With the goal of providing regulations on the offer and sale of digital commodities, the CLARITY Act passed the House of Representatives last year and is now sitting in the Senate.
