Advocacy group calls for SEC to rethink crypto probes focusing on assets and derivatives from day one.
The Digital Chamber has issued a compelling call for the United States Securities and Exchange Commission (SEC) to initiate an immediate review of all existing crypto-related investigations, notices, and ongoing lawsuits from day one of the incoming Trump administration. This move is seen as a crucial step in allowing the SEC to address and reset its historically troubled relationship with the digital asset industry.
Background on the Digital Chamber’s Initiative
The Digital Chamber, led by Paul Atkins, who has been nominated by Trump for SEC chair, emphasizes that the new administration presents an opportunity for the SEC to establish fresh ground in its interactions with the crypto sector. In a Dec. 18 statement, Atkins outlined the necessity of fostering a culture of mutual trust between the digital asset industry and the SEC.
Key Points from Atkins’ Statement:
- Trust-Building: The goal is to create an environment where digital asset participants can operate with confidence in the SEC’s integrity.
- Mutual Respect: The SEC should recognize that most crypto professionals are committed to responsible practices, aligning their values with the regulator’s goals.
Ongoing Legal Battles and the Need for Action
The SEC remains engaged in significant legal disputes with major industry players such as Binance, Coinbase, Consensys, and Ripple. Additionally, the agency has been informed about potential wellsprings of risk from Uniswap and Immutable, further complicating its regulatory landscape.
Proposed Priorities for the New SEC Administration
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Legal Stays to Ensure Fair Processes:
The new SEC is expected to seek continuations in ongoing litigation cases that do not involve fraud or investor harm, providing time to finalize regulations that respect market stability. -
Revisiting Regulatory Frameworks:
A key priority will be the review and potential repeal of the 2019 framework on the Howey test’s application to digital assets. The Hinman speech is criticized for creating an uneven playing field between winners and losers, undermining the fair valuation principles central to securities regulation. -
Adjustments to Regulatory Tools:
The SAB 121 rule, mandating crypto custodians to list their holdings as liabilities on balance sheets, is seen as unduly burdensome. This rule’s repeal has faced bipartisan support but was ultimately blocked by President Joe Biden. -
Exploring New Regulatory Boundaries:
The SEC will consider whether to extend its jurisdiction beyond traditional securities markets into areas like decentralized finance (DeFi) platforms, necessitating careful analysis of market impacts and regulatory frameworks.
Potential Implications on the Crypto Industry
The proposed changes are expected to significantly influence the crypto ecosystem. Resetting relations with regulators could pave the way for greater clarity and stability in market operations, potentially attracting new players and stabilizing prices amidst current volatility.
Conclusion
This comprehensive approach aims to restore trust and foster collaboration between the SEC and the digital asset community. By addressing past issues and implementing necessary reforms, the new administration seeks to create a framework conducive to growth and innovation within the crypto industry.
