Copyright CoinDesk
The U.S. Securities and Exchange Commission is working toward a package of exemptions focused on offering crypto assets that are tied to investment contracts, said Chairman Paul Atkins. "I have asked the staff to prepare recommendations for the commission’s consideration that facilitate capital formation and accommodate innovation while, at the same time, ensuring investors are protected," Atkins said in remarks prepared for delivery Wednesday at a Federal Reserve Bank of Philadelphia event. "By streamlining this process, innovators in the blockchain space can focus their energies on development and user engagement rather than navigating a maze of regulatory uncertainty." The long-standing debate over how to define whether digital assets are linked to investment contracts — a term of art defined by the Supreme Court in the so-called Howey Test — may get clarity beyond the previous administration's preference for handling the question through crypto enforcement actions. Atkins underlined his view that even crypto assets linked to investment contracts may not always retain that status. "Investment contracts can be performed and they can expire. They do not last forever simply because the object of an investment contract continues to trade on a blockchain," he said. It can cease when the issuer "either fulfills the representations or promises, fails to satisfy them, or they otherwise terminate." Even if tokens are trading in association with investment contracts, Atkins argues that they should still be able to be handled through "super apps" from firms not necessarily registered with the SEC, such as those overseen by the Commodity Futures Trading Commission or state regulators. "While capital formation should continue to be overseen by the SEC, we should not hamstring innovation and investor choice by requiring the underlying assets to trade in one regulated environment versus another," Atkins said. In the speech, Atkins further outlined his views on what lies outside his agency's securities jurisdiction, including network tokens, digital collectibles and "digital tools," such as memberships, tickets or identity badges. Tokenized securities, though, are definitely in the SEC's regulatory orbit, he said. Meanwhile, he said his agency is still working with Congress to enact market structure legislation soon that will further codify his agency's crypto position. "What I envision aligns with legislation currently being considered by Congress and aims to complement, not replace, Congress’s critical work," he said. A new law will help protect the permanence of the policy shift, he argued. "While the commission can provide a rational view under current law, there will always be risk that a future commission could reverse course." Atkins has spoken often in recent speeches about the limits on his agency's reach into crypto, which he called a "commitment to humility." "Congress crafted the securities laws to address specific problems — situations in which people part with their money based on promises that depend on the honesty and the competence of others," he said. "They were not designed as a universal charter to regulate every novel form of value, digital or otherwise."
