SEC Chair Paul Atkins has outlined a multi-step regulatory roadmap for crypto markets, while Congress continues discussions on the CLARITY Act. The roadmap proposes SEC rulemaking and exemptions as a path towards market structure until comprehensive legislation becomes available.
The Commission is also looking to determine when a crypto asset constitutes an investment contract and the termination of this status. This SEC roadmap would determine issuance models and secondary trading considerations in American markets. It also resolves uncertainty about the token lifecycle classification.
SEC Considers Innovation Waiver Amid CLARITY Act Wait
Atkins, in a speech at the ETHDenver conference, stated that the SEC was looking into a narrow exemption for trading of tokenized securities on new platforms. The framework would permit a regulated operation as permanent regulations, such as the CLARIY Act, are being formulated. The volume of trading would be limited, and there would be a set procedure for participants.
The proposal can allow liquidity decentralization for select securities. The pilot period would involve regulators testing market data.
The SEC roadmap would also include formulating rules to establish better avenues for fundraising by sales of crypto assets. The step is expected to align the issuance of tokens with the current securities disclosure regulations. Compliant fundraising structures would also be available to issuers.
This change is an indication of a shift to formal registration choices as opposed to litigation on a case-by-case basis. The agency would give clear compliance requirements to market players prior to launching their products.
Atkins stated that the commission is in collaboration with Congress to advance the crypto market structure bill. As a part of the development towards achieving progress on the CLARITY Act, crypto firms such as Ripple, Coinbase, and Banks are meeting at the White House for a third time this month.
Before the end of this month, banks and crypto leaders must resolve their conflict over stablecoin rewards in the bill. April has become a possible option for when the CLARITY Act may pass or even come close to passing, even as banks and crypto hold discussions on the stablecoin yield provision.
Custody Clarity Also In Plan
A no-action relief on wallet software and user interfaces is also part of the SEC roadmap. It aims to establish the conditions under which those tools are not subject to Exchange Act registration. The guidance is directed towards non-custodial infrastructure providers.
The agency will also examine custody regulations for non-security crypto assets, such as payment stablecoins, that are in possession of broker-dealers. This would differentiate between the custody treatment of security tokens and that of payment tokens.
The blockchain systems would be used to transfer the agent modernization proposal so as to keep official records of ownership. In addition, a tokenized equity framework would be incorporated into the current reporting procedure. This change would help prevent any issues regarding on-chain settlements and shareholder communication, which is also an objective of the CLARITY Act.
Meanwhile, Atkins has expressed support for crypto in 401(k)s plans. The retirement safeguards are tackled under an SEC-CFTC harmonization. Both are also collaborating to seal jurisdiction gaps regarding crypto markets.
Last December, when Atkins commented on the innovation exemption rules, he suggested they would be implemented last month, though that didn’t happen. He noted that these rules will allow companies roll out crypto products more quickly.