Editor's note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our subscribers each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day's biggest stories. Act on the news with POLITICO Pro. Two things have been consistent since your Morning Money host started writing about digital assets last year: The first: The SEC is seeking to bring crypto exchanges and the entrepreneurs behind tokenized offerings under its direct oversight. The second: Key players in the industry — a broad term that I'll use to refer to unregistered exchanges, brokerages and lending platforms that offer customers access to digital asset ecosystems — don't want to be subject to the same stuffy rules that apply to traditional securities businesses. As is the case in many situations when there are two groups with intractable positions, the conflict escalates the longer it persists. SEC Chair Gary Gensler on Thursday offered his most specific critique to date of the industry's position, ticking through a litany of ways in which new crypto firms operate similarly to the ancient fuddy-duddies of traditional capital markets. For major crypto exchanges, falling into compliance would require them to break up different parts of their businesses "into separate legal entities to mitigate conflicts of interest and enhance investor protection," per POLITICO's Declan Harty. And while Gensler said there's some flexibility around the registration of individual token offerings, "the Commission has spoken with a pretty clear voice here," he said. "Not liking the message isn't the same thing as not receiving it." Will this prompt crypto exchanges, tokenized startups and the entrepreneurs behind decentralized finance platforms to rush to the SEC's doors to start the process of registering? Probably not. But it does lay some groundwork for how Gensler will likely address crypto-related questions from members of the Senate Banking Committee when it meets on Sept. 15 for an SEC oversight hearing. That event falls exactly one day after the Senate Agriculture Committee holds a markup on legislation that tasks the Commodity Futures Trading Commission with regulating spot markets and exchanges where Bitcoin, Ether and other so-called digital commodities trade. The Senate Ag bill, which is sponsored by Chair Debbie Stabenow (D-Mich.) and Sen. John Boozman (R-Ark.), exempts any investment security from falling under its definition for "digital commodity" — a move that leaves the SEC's jurisdiction over those assets intact. In his prepared remarks, Gensler said he "look[s] forward to working with Congress" to give the CFTC new authorities while "maintaining the regulation of crypto security tokens and related intermediaries at the SEC." These two things are not mutually exclusive. The Stabenow and Boozman bill specifically allows digital commodity platforms to register with both regulators. However, that framework could lead to questions about how the SEC would be able to exert its current authority — and potentially compel the breaking up of crypto businesses — if the CFTC has new powers over how those platforms certify, list, delist, transact and maintain custody over assets that fall into that "digital commodity" bucket. For now, industry players haven't been encouraged by the level of coordination between federal agencies when it comes to crypto policy. "We have not seen as much evidence of that active dialogue happening between the SEC, the CFTC [and other regulators like] Treasury," said Bitwise Asset Management general counsel and CCO Katherine Dowling in an interview. IT'S FRIDAY — Sam is back from a week of watching coal barges float up and down the Rhine (while also enjoying a Kolsch or two). Please send tips, story ideas and feedback to ssutton@politico.com.
| 
No comments:
Post a Comment