Cryptocurrency stakeholders and experts from across the investing landscape on March 21 discussed the parameters for defining a security in the context of digital assets as part of the Securities and Exchange Commission’s Crypto Task Force’s initial public roundtable discussion.
Eleven speakers shared their views as part of the discussion that mostly focused on overviews and definitions.
The Crypto Task Force, which SEC acting Chair Mark Uyeda established in January to develop a comprehensive regulatory framework for cryptocurrencies, is led by Republican SEC Commissioner Hester Peirce.
In kicking off the March 21 discussion, Peirce likened the event to the start of spring.
“Spring signifies new beginnings, and we have a new beginning here: a restart of the commission’s approach to crypto regulation,” she said. “The formation of the Crypto Task Force gave permission to staff in the building to work earnestly towards a workable framework for crypto regulation, and staff have responded with palpable enthusiasm.”
Under former Chair Gary Gensler, the SEC was accused of “regulation by enforcement” with respect to crypto. He frequently criticized the crypto industry during his tenure and said there are already sufficient regulations in place under laws governing securities, commodities, money laundering and sanctions.
Now led by Uyeda, the SEC has signaled a reverse in course. It has walked back from several crypto-related lawsuits and has rescinded guidance that made it harder for banks to provide custody services for digital assets.
But there continues to be disagreement around which crypto tokens should be classified as securities, which is a key focus for the task force.
During the roundtable, crypto skeptics and supporters differed on the SEC’s performance to date, how the courts have responded and what the SEC should do moving forward.
Miles Jennings, general Counsel at a16z crypto, a venture capital fund that invests in crypto startups, said the previous administration didn’t do an adequate job in providing regulatory clarity to, and oversight of, the crypto market.
“I don’t think that anyone can credibly argue that the last administration’s approach to the industry accomplished any of the SEC’s objectives,” Jennings said. “It did not lead to investor protection, it did not lead to capital formation, it did not lead to efficient markets. As a result of that, the current approach is clearly a failure and we have to do better.”
John Reed Stark, founder of John Reed Stark Consulting and former SEC enforcement division staffer, and Lee Reiners, a lecturing fellow at the Duke Financial Economics Center and Duke Law, contended that courts have already provided clarity on crypto regulation and the SEC’s shift to under the new administration is a mistake.
“This law has been decided, and it’s out there,” Stark said. “And the SEC can’t abdicate its responsibility and its mission to enforce those laws.”
The task force plans to host more roundtables to discuss other issues, though a date for the next event has yet to be announced.
