The North American Securities Administrators Association (NASAA) joined a small group of opponents of the Securities and Exchange Commission’s proposed Regulation Crypto Assets.
NASAA represents state securities regulators and other North American jurisdictions. Typically, the group lobbies to boost state oversight in the securities sector. In the past, they have voiced opposition to issues such as Regulation A, as updated by the JOBS Act, and securities crowdfunding in general.
Regulation Crypto Assets creates a bespoke exemption that supports the issuance of crypto while seeking to protect investors. The exemption is partially modeled after Reg A and Reg CF – to online capital formation pathways.
NASAA worries that Reg CA will “preempt state securities laws” from applying to a crypto offer:
NASAA declares:
“Regulation Crypto Assets lacks the robust investor protections necessary for the types of offerings, and offerees, contemplated under its exemptions. The Proposal would strip away disclosure requirements, filing requirements, and resale restrictions without due regard to the adverse impact on retail investors. Promulgating registration exemptions without common investment protections not only invites fraud and victimization, but it undermines the trust necessary to promote innovation in the capital markets. The Proposal also exceeds the Commission’s statutory authority to preempt state securities regulation and ignores case law on the meaning of the term “investment contract.” The Proposal should be withdrawn because it is bad policy that would endanger investors, harm other registrants, and weaken the securities markets generally.”
NASAA tells the Commission to “withdraw Regulation Crypto Assets” and repropose a new set of exemptions.
While state securities regulators play a vital role in protecting consumers against fraud, a responsibility it will maintain even under the proposed Reg CA, at times the group veers more into the path of larger government as opposed to a more efficient, nationwide approach to regulation.
