This past week, the Securities and Exchange Commission (SEC) announced a new Crypto Task Force established with the mission of creating a regulatory framework for digital assets. After years of regulation by enforcement, the SEC is finally doing its job.
The change arrived with the departure of Gary Gensler as Chair of the Commission, replaced by acting Chairman Mark Uyeda.
As Commissioner Hester Peirce is leading the initiative, we can expect relatively quick work on a proposal.
CI connected with several former SEC attorneys who shared comments on the Crypto Task Force.
Long-time commentator, former SEC Senior Counsel, and current partner at Seward & Kissel, Philip Moustakis, said the Crypto Task Force is an encouraging sign for crypto investors, intermediaries, and entrepreneurs.
“Commissioner Peirce has long been an advocate for crypto and creating a kind of regulatory sandbox to give it room to grow,” stated Moustakis. “Under Chair Clayton, the Commission’s enforcement efforts were paired with informal guidance that fell away under Chair Gensler. This announcement promises that, along with the return of such informal guidance, valuable in itself, there may be more formal guidance in the works. This is not to say the federal securities laws will not apply to crypto offerings or transactions under appropriate facts and circumstances. Ideally, however, there will be more clarity with respect to when and how they apply, and they will be applied in a way that lets crypto to be crypto.”
Partner and co-chair of the Securities Litigation and Enforcement practice at Herrick, Feinstein, and former SEC Trial Counsel, Arthur Jakoby, said by creating the Crypto Task Force, the SEC took its first steps in fulfilling a Trump campaign promise to overhaul the Commission’s crypto approach by pursuing a new regulatory framework.
“The SEC’s move marks a significant policy win for the crypto industry, which for years has complained about the SEC’s efforts to legislate via enforcement and has lobbied for the enactment of crypto-specific regulations, to be drafted with industry and investor input, which will result in clear and concise legal standards for realistic paths to registration and sensible disclosure requirements,” stated Jakoby. “The SEC’s announcement is a clear signal that it will no longer predominantly rely upon enforcement actions to define the law but rather it will provide proactive guidance via clear legislation. The announcement is also a sign that the reorganized SEC will review all current crypto related enforcement actions and likely discontinue existing cases which the Commissioners view as ill-conceived or inconsistent with promoting the growth of the crypto industry in the United States.”
Former branch chief at the SEC Division of Enforcement and current partner at Davis Wright Tremaine, Steve Gannon, said the announcement of the Task Force was exciting news for the digital asset and blockchain industry.
“Based on Commissioner Peirce’s earlier comments, such as her well-known “Rendering Innovation Kaput” dissent from April 2023, she is very likely to foster innovation (as was done with the development of Regulation ATS) with the use of “regulatory sandboxes,” no action letters and the like. This may exemplify how a regulator and a regulated industry can collaborate to solve important issues.”
As both the House and the Senate are controlled by Republicans, there is a clear path for any legislation deemed necessary to create new rules. Digital assets are now poised to execute on the vision of a digital asset future.
