Hopes rise for a defined legal framework amid years of enforcement-driven regulation
The cryptocurrency industry is expressing cautious optimism following the launch of a dedicated task force by the U.S. Securities and Exchange Commission (SEC), aimed at establishing a clear regulatory framework for digital assets.
Under the leadership of Republican SEC Commissioner Hester Peirce, known in crypto circles as “CryptoMom,” the task force was announced on January 21 by acting Chairman Mark Uyeda. Its objective is to delineate regulatory boundaries for crypto assets within the SEC’s existing jurisdiction, offering much-needed guidance to an industry that has long grappled with regulatory uncertainty.
The formation of the task force came just a day after former President Donald Trump’s inauguration, a move that has been well received by cryptocurrency advocates anticipating a more favorable approach under his administration. With Paul Atkins nominated as the new SEC chairman, industry groups are urging the regulator to act swiftly, independent of pending legislative decisions.
The SEC stated that the task force would not only define compliance requirements but also facilitate the registration of crypto companies, providing a structured framework for necessary disclosures. Additionally, the agency plans to hold public roundtables and accept feedback via email to ensure broad industry engagement.
Calls for Immediate Action
Industry leaders are pressing the SEC to take prompt steps that could provide immediate clarity. Kristin Smith, CEO of the Blockchain Association, emphasized that the agency has various tools at its disposal that have not been fully utilized.
“There are a lot of tools that the SEC has and just hasn’t been exercised in the past; this is a process that will start this conversation,” she said.
Smith pointed to the potential benefits of issuing more interpretive guidance, particularly on issues such as staking—a process in which cryptocurrency investors pledge their holdings to validate network transactions in exchange for rewards. She argued that clarifying when staking constitutes a security would be a crucial first step.
The industry also seeks a formal rule-making process, complete with public comment periods, to ensure broader input. Another suggestion is encouraging companies to submit no-action letters—requests for assurance that a proposed business model does not violate securities laws.
The SEC’s regulatory approach over the past four years, largely reliant on enforcement actions under former Chair Gary Gensler, has drawn widespread criticism. Industry participants have argued that the lack of explicit rules has led to confusion, stifling innovation while inadvertently fostering fraudulent activities.
“The result has been confusion about what is legal, which creates an environment hostile to innovation and conducive to fraud. The SEC can do better,” the regulator said in its announcement of the task force.
Industry Proposals and Expectations
Major crypto firms are already responding to the SEC’s call for proposals. A16z Crypto, the blockchain-focused arm of venture capital giant Andreessen Horowitz, outlined potential regulatory changes in a recent blog post. The firm emphasized that certain measures could be implemented “immediately and easily” to enhance accessibility while safeguarding investors.
Among its recommendations, A16z proposed allowing traditional broker-dealers to engage in cryptocurrency transactions without excessive restrictions. The firm’s chief compliance officer noted that current rules require separate approvals and additional regulatory burdens for brokers handling crypto assets, limiting their participation in the market.
Furthermore, the firm advocated for tailored registration requirements for broker-dealers operating in the crypto space and the establishment of oversight mechanisms to ensure compliance with anti-money laundering laws. It also suggested that the SEC collaborate with organizations such as the Financial Industry Regulatory Authority (FINRA) to issue joint guidance on operational risks in the sector.
J.W. Verret, a securities law professor at George Mason University and a former member of the SEC’s investor advisory committee, echoed the need for greater regulatory clarity. He emphasized the importance of defining what constitutes a security in the context of digital assets.
Verret also suggested the SEC consider adopting a private offering exemption, akin to existing exemptions commonly used by venture capital firms investing in Silicon Valley startups. This, he noted, could align with Peirce’s previously proposed “safe harbor” framework, which would provide decentralized network developers with a grace period to build their projects without facing immediate securities law compliance hurdles.
Despite ongoing debates on how best to regulate the industry, Verret remains optimistic about the SEC’s willingness to engage with the crypto community.
“The ethos of crypto is to embrace debate—that is the strength of crypto, and having these open forums at the SEC would be a great thing,” he said.
With the crypto sector eager to secure legitimacy and regulatory stability, industry players are watching closely to see whether the SEC’s task force will deliver the clarity they have long sought.
