The US Securities and Exchange Commission has introduced a new regulatory proposal seeking clarification on the classification of cryptocurrencies under federal securities laws. The proposal has been submitted to the White House’s Office of Information and Regulatory Affairs for review.
As part of the proposal, the SEC has suggested a new interpretative framework called a “token taxonomy”. The goal of this framework is to help determine which types of crypto tokens should be treated as securities and therefore fall under the regulator’s oversight.
Typically, new financial regulations involve a lengthy rule-making process that includes public consultations and comment periods. However, this proposal is structured as interpretive guidance. In simple terms, the SEC is explaining how existing securities laws should apply to digital assets instead of introducing entirely new regulations.
Even though it is not a new rule, the guidance is expected to carry more legal weight than earlier staff-level statements. Many industry participants had previously criticised those statements for being unclear or inconsistent.
SEC Chair Paul Atkins and Commissioner Hester Peirce had earlier indicated that the agency was working to clarify how blockchain-based assets and tokenised securities fit within current US financial laws. They discussed the issue publicly during the ETH Denver conference earlier this year.
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