SEC Commissioner Mark Uyeda delivered a speech earlier today in Hong Kong where he lauded the availability of alternative assets as contributing significantly to our global economies.
These alternative assets include private securities, both debt and equity, as well as crypto assets.
Commissioner Uyeda explains:
“Bank finance often cannot provide the risk capital needed by venture-stage businesses to help them innovate and grow. Without a wide range of alternative investments that help provide nontraditional funding to companies, we might not have innovations in technology, healthcare, and other areas that can lead to new products and services and improve standards of living. From the investor perspective, traditional investments such as listed equities, exchange-traded funds (“ETFs”), and bonds may not provide the desired diversification for sophisticated investors like pension plans for workers, university endowments, sovereign wealth funds, and family offices.”
These statements were shared at the 2024 AIMA APAC Annual Forum in Hong Kong. Uyeda highlighted three different topics of Alts including:
- Private Fund Regulations
- Crypto Innovation
- And Global Regulatory cooperation
The Commissioner believes that the SEC has overstepped its authority in its regulatory approach to private funds as sophisticated investors do not need the same protections as retail investors.
As for crypto, Uyeda says the Commission is burying its head in the sand in regard to regulation. The SEC must address the question of whether a crypto asset is a security.
“Market participants have been forced to struggle with this analysis and decipher SEC views from various settled enforcement actions and litigation in the courts.”
Uyeda says there are growing benefits of crypto and other regulators, not the US, are leading the way for digital asset regulation.
As for international cooperation on regulation, this simply makes a lot of sense. Simular rules or coordinated efforts can streamline the capital formation and regulation process.
Uyeda highlighted the risk of “over-regulation:”
“Without market-based finance, economic growth would likely stagnate. Nonbank market participants are needed to allocate risks and grow our markets. To the extent that there are activities that raise substantial risks to the global financial system, prudential and markets regulators should seek to understand and thoughtfully mitigate these risks. However, outdated rhetoric about the purported risks of “shadow banking” is unhelpful and not productive. As such, prudential and markets regulators should work together constructively in overseeing global financial stability, recognizing that the banking system and the capital markets serve two fundamentally different purposes.”
Uyeda said that “Hong Kong, Singapore, Japan, and Australia, among others, have shown leadership in how to facilitate crypto and Fintech capital formation.”