I thought it was an opportunity for the US Securities and Exchange Commission (SEC) to understand cryptocurrency , but what seemed to be noticed on Friday's forum was that the agency's staff already knew how much.
From questions about atomic swaps to comments on airdrops and forks, the SEC's Financial Technology Forum at Washington Headquarters shows that the US securities regulator has been paying close attention to the world of cryptocurrencies and is better than some people think. many.
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Speaking of cryptocurrency, SEC may know better than you.
“Obviously, they have been listening to people in the community – and their lawyers – what they said to them, and they have put a lot of effort into understanding the industry,” said Joshua Ashley Klayman, managing director of law firm Klayman LLC.
Klayman was invited to participate in the round table of this forum:
“They seem to be very familiar with some technical content and terminology, including atomic interchange. This is a higher level of discussion than the blockchain basics.”
Several participants mentioned the time when the Deputy Minister of the SEC's Trading and Marketing, Elizabeth Baird, talked about atomic swaps. This is the latest trading model in which the two parties exchange one cryptocurrency directly for another cryptocurrency without an intermediary, and neither link to the transaction until both parties complete the transaction. Will be complete.
In response, Baird asked whether such a transaction would reduce the risk of cryptocurrency transactions and transfers.
At another round table, Amy Steele of Deloitte and Jennifer McHugh, senior consultant of the SEC Investment Management Department, discussed the impact of airdrops and forks on user risk.
Compared with Washington officials, SEC members know much more about cryptocurrencies.
Valerie Szczepanik, senior adviser to the SEC's Digital Assets, mentioned an Ethereum smart contract programming language when it talked about the agency's need to communicate with developers.
“We also learned that federal securities laws are as complex for computer scientists as writing Solidity smart contracts for regulators.”
Chen Arad, chief marketing officer at Solidus Labs and one of the participants in the forum, revealed that senior SEC staff can “easyly” discuss various technical issues, including nodes, consensus mechanisms, and smart contracts.
Lawyer Stephen Rutenberg agrees. He said that in his view, the SEC's understanding of distributed ledger technology "is beyond the imagination of most people."
Understanding does not mean recognition, don't expect too much
Although the SEC may have demonstrated its strength in the forum on Friday, it does not necessarily mean that its attitude towards tokens and securities laws will change significantly.
Teddy Fusaro, chief operating officer of asset management company Bitwise, cited the ETF as an example, and regulation will not happen overnight. Overall, the ETF was introduced about 25 years ago, but the SEC has not yet issued standard rules for issuers seeking exemptions.
Klayman agrees, she believes, "The law is the law," unless we introduce a new law for this asset class, "we should not expect a completely different answer."
However, although the attitude of regulators in this area may not change significantly, this does not mean that companies selling unregistered securities have no recourse.
Rutenberg said, "The most important signal from the SEC forum is that they seem willing to consider stopping the issuance of letters of action to ICO projects that no longer sell tokens."
However, he pointed out that the SEC did not give any practical guidance on this, he said:
"However, if anyone expects the SEC to make a firm commitment or provide a clearer guide, they are likely to be disappointed with the forum."
Despite so much in the forum, the discussion of market manipulation is a missing link.
Market manipulation has always been a hot topic of concern for the SEC, and several applications for the Bitcoin ETF were rejected due to concerns about the market. In fact, these concerns have been made public, and Bitwise, one of the Bitcoin ETF applicants, has submitted two reports to the SEC in an attempt to refute this claim.
This may be why this topic has barely appeared on the forum. Arad said that more discussions about manipulating and monitoring infrastructure are still necessary.
“This is an important concern, especially as more and more of our clients are turning their attention to institutional investors and their funds.”
Szczepanik did mention manipulation and other issues in the closing remarks and reiterated the information she and other SEC officials have been asking for for months.
“Dalia Blass and the investment management department have issued a complete letter, actually two letters asking for advice on things like custody, manipulation, liquidity, valuation, redemption, etc…”