This is a segment from the Forward Guidance newsletter. To read full editions, subscribe.
About two weeks after the SEC formed a crypto task force, unit leader Hester Peirce checked in.
The rough message: We’re working on a bunch of things, but please be patient.
Peirce (no surprise) criticized the previous path taken by the SEC. It “incessantly slammed on the enforcement brakes as it lurched along a meandering route with a destination not discernible to anyone.”
Further, its handling of crypto “has been marked by legal imprecision and commercial impracticality” (in case you didn’t already know how Peirce felt).
It’ll take time to “disentangle all these strands,” she noted several times — ongoing litigation included. Seemingly related, the SEC plans to scale back staff focused on crypto enforcement actions, the New York Times reported.
Among 10 listed priorities, Pierce notes the status of crypto assets under the securities laws as “fundamental to resolving many other questions.” This jibes with what Bitwise general counsel Katherine Dowling told me about the “dolphins in the fish nets” — alluding to assets the SEC has previously labeled as securities.
Another priority is to identify areas that fall outside the SEC’s jurisdiction — a signal the agency intends to stay in its lane.
Other focuses include creating a framework for custodying client assets; offering clarity on if and how crypto lending and staking programs are covered by securities laws; and creating some sort of cross-border sandbox for crypto projects.
On crypto ETFs, the task force will be clear about its approach when approving/disapproving planned products, Peirce promises. As issuers look to add staking and in-kind creations/redemptions to existing products, she added, the SEC may first need to make progress on custody (and other) issues.
The SEC is working toward these goals “in an orderly, practical and legally defensible way,” Peirce made clear.
And so, she reminds those eager for change: “It took us a long time to get into this mess, and it is going to take us some time to get out of it.”
