On February 21, 2025, Commissioner Hester Peirce of the U.S. Securities and Alternate Fee (SEC) issued a assertion inviting public enter on a variety of points associated to crypto belongings and blockchain know-how (the Assertion). Though the Assertion was issued by Commissioner Peirce in her particular person capability and doesn’t essentially mirror the views of the Fee or different Commissioners, it resembles an idea launch in its scope and format, inviting public enter on a variety of points regarding crypto belongings and blockchain know-how.
The Assertion displays the work of the SEC’s newly established Crypto Activity Pressure and follows Commissioner Peirce’s announcement on February 4, 2025, the place she supplied a primary glimpse into the Activity Pressure’s preliminary crypto belongings priorities.1 The Assertion delves deeper into particular regulatory challenges, proposing a crypto asset taxonomy and posing questions in regards to the safety standing of crypto belongings, public choices, registered funding automobiles, custody, buying and selling, tokenization, and sandbox initiatives. Nonetheless, as Commissioner Peirce famous, “These questions should not a roadmap to actions the Fee or its workers will take […] so be happy to pose and reply different questions and to handle subjects that now we have not raised.” Highlighting the Activity Pressure’s crucial for transparency and public enter to handle the various questions posted, Commissioner Peirce defined, “The scope of this inquiry is expansive and calls on the particularized information of a broad vary of individuals.” The Assertion supplies hyperlinks to on-line varieties for submitting written suggestions or requesting a gathering with the Activity Pressure.
This seems to be an necessary alternative to take part within the Activity Pressure’s work and to contribute to the SEC’s understanding of the wants of crypto market members. Nonetheless, the window of alternative could also be restricted, as Peirce inspired the general public to “act promptly,” because the Activity Pressure is expediting its efforts to ascertain and implement new laws. Though the Activity Pressure will settle for enter at any time, Peirce defined, “the sooner we obtain your enter the extra doubtless it’s to tell the choices for consideration.” Sidley has in depth expertise and experience in advising shoppers on these issues and may help you in making ready and submitting your enter to the Activity Pressure.
The Assertion poses over 100 questions throughout 48 numbered paragraphs, protecting many various subjects. The subjects are based mostly on a possible taxonomy with 4 classes (i) crypto belongings which can be securities, (ii) crypto belongings which can be provided and offered as a part of an funding contract, a safety, however the crypto asset isn’t itself a safety, (iii) tokenized securities, and (iv) all different crypto belongings which aren’t securities.
Under are among the notable points the Activity Pressure invitations stakeholders to offer their insights and proposals on:
- the best way to tackle the challenges and prices of registering or qualifying token choices beneath the Securities Act of 1933 (Securities Act) and whether or not tailor-made disclosure necessities or new varieties or mechanisms are wanted for crypto asset issuers and traders
- whether or not the Fee ought to contemplate a model of Commissioner Peirce’s proposed token secure harbor, which would offer a time-limited exemption from the registration necessities beneath the Securities Act for presents and gross sales of crypto belongings through the improvement of a blockchain challenge, topic to sure circumstances and disclosures
- the best way to regulate platforms and market members that commerce crypto asset or tokenized securities alongside nonsecurities and whether or not the Fee ought to create a brand new entity registration standing or use or adapt the present necessities for nationwide securities exchanges or different buying and selling programs
- the best way to facilitate buying and selling and custody preparations for crypto belongings by broker-dealers, funding advisers, and funding firms and whether or not the Fee ought to amend current guidelines, suggest new guidelines, or present steerage to handle the distinctive nature and dangers of crypto belongings
- the best way to tackle broker-dealer steerage for supporting crypto belongings beneath the client safety rule and different monetary accountability necessities, together with whether or not to switch the Particular Goal Dealer-Supplier Assertion or formally withdraw it
- the best way to tackle funding advisers’ fiduciary responsibility to their shoppers associated to greatest execution and conflicts of pursuits for crypto belongings
- the best way to regulate numerous crypto lending providers in a method that won’t stifle the potential alternatives they supply
- the best way to tackle itemizing purposes for crypto asset-based exchange-traded merchandise and whether or not the Fee ought to contemplate elements resembling the dimensions and liquidity of the underlying spot market, the provision of complete surveillance-sharing agreements, and the reliability and dissemination of pricing info
- the best way to tackle market construction for tokenized cash market funds, stablecoins, and plenty of different forms of belongings and whether or not the Fee ought to make clear or amend any guidelines to make sure a merit-and-technology-neutral strategy to tokenization
- whether or not the Fee ought to set up a micro-innovation sandbox, which could possibly be used for small-scale tasks, together with tokenization and blockchain tasks, and whether or not a cross-border sandbox may tackle challenges that U.S. and non-U.S. companies face when trying to innovate in a number of jurisdictions
Regardless of signaling a shift within the SEC’s strategy to digital asset regulation, the Assertion makes it clear that the Fee will proceed to actively reply to fraud involving securities as outlined beneath the Securities Act and/or the Funding Firm Act.
Market members ought to contemplate whether or not to have interaction with the Activity Pressure and assist form the way forward for digital asset regulation. Sidley stands prepared to help shoppers in navigating the advanced and evolving regulatory panorama for crypto belongings and blockchain know-how in addition to in participating with the SEC’s Crypto Activity Pressure. Sidley has represented shoppers in engagements with the SEC on these points for years, together with latest conferences with the Activity Pressure and Commissioner Peirce.
1 For added details about Commissioner Peirce’s preliminary assertion, see the next Sidley alert: A Roadmap to Engagement With the U.S. SEC’s New Crypto Activity Pressure.
