The Securities and Exchange Commission (SEC) is signaling a new era of transparency with crypto regulation. This is all happening against the backdrop of increasing calls for regulatory capture in the quickly changing digital asset space. The SEC's recent activities, including hosting several crypto roundtable discussions and panels, signal a potential shift in the agency's regulatory stance.
The next SEC advisory panel is scheduled for April 25. They should direct their attention toward developing bright line rules for crypto custodians and other companies that hold crypto on behalf of their clients. This emphasis on custodial practices further underscores the SEC’s commitment to investor protection and securing digital assets.
Brandon Ferrick, general counsel at crypto company Douro Labs, said it was great to see the SEC being open to input from the public on crypto policy. He praised the agency’s new, available ways for industry to provide feedback to the agency.
"[The SEC] has a public portal where you can just submit written commentary on your thoughts for the crypto regulatory environment, and you can schedule meetings with them," - Brandon Ferrick, general counsel at Douro Labs.
This transparency, Ferrick contends, is a promising indication that the crypto industry has not yet fallen victim to regulatory capture.
At the SEC’s recent roundtable on March 21, there were and should be concerns about potential unintended consequences. This event featured movers and shakers from the crypto industry, SEC officials, and crypto industry critics. The second roundtable discussion, held April 11, heavily centered on trading rules and featured witnesses from companies such as Uniswap and Coinbase.
Under former SEC chairman Gary Gensler, the SEC took a regulation-by-enforcement approach. This strategy sparked strong backlash from all areas of the crypto world. John Reed Stark, a former SEC official, has been loud and proud on the anti-crypto warpath. In fact, he opposes any effort at comprehensive regulatory reform for digital assets, demanding instead that they comply with the current body of securities law.
Regulatory capture is still a big issue within the crypto space. And some analysts and executives fear that the industry’s maturation is being unduly shaped by regulatory action. The SEC's recent efforts to engage with the crypto community may indicate a move toward a more balanced and informed regulatory framework.
