SEC Drops Definition of Digital Asset in Final Rule
• The U.S. Securities and Exchange Commission (SEC) erased the definition of “digital asset” from its latest hedge fund rule, reversing a move that might have started formalizing crypto’s role.
• The agency is still considering crypto matters, which have taken an outsized role in both its enforcement actions and its ongoing rule proposals.
• The SEC has made several policy moves meant to clearly ensnare crypto into existing rules, including reopening a proposed rule redefining the term “exchange” and explicitly adding decentralized finance (DeFi) to it.
U.S. SEC Reverses Move on Digital Asset Definition
The U.S. Securities and Exchange Commission (SEC) took one small step backwards in regulating the crypto sector on Wednesday when it erased what would have been its first formal definition of “digital asset” from its latest hedge fund rule. While the SEC had initially included the definition in its 2022 proposal to overhaul mandatory disclosures for hedge funds, the securities regulator yanked it in the final rule approved by the commissioners, explaining that they are continuing to consider this term but not adopting ‘digital assets’ as part of this rule at this time”.
Crypto Still Takes Up Outsized Role in SEC’s Considerations
Despite deleting their initial definition of “digital assets”, the agency is certainly continuing to consider crypto matters, which have taken an outsized role in both its enforcement actions and its ongoing rule proposals. In April 2021, for example, the regulator reopened a previously proposed rule redefining the term “exchange” and explicitly adding decentralized finance (DeFi) to it – a move that drew sharp criticism from industry members as well as two of five SEC commissioners.
SEC Makes Several Policy Moves To Ensnare Crypto Into Existing Rules
The SEC has made several policy moves meant to clearly ensnare crypto into existing rules beyond just defining “digital asset”. For instance, another proposal was made in February 2021 that could bar investment advisers from keeping assets at crypto firms; This was also followed by another proposed definition for a digital asset earlier this month which described such a thing as “using distributed ledger or blockchain technology” and including “so-called ‘virtual currencies,’ ‘coins’ and ‘tokens.”
Implications Of Reversal On Digital Asset Definition
The reversal on officially labeling digital assets means that while there is currently no official definition within regulatory language used by the SEC , they are still actively considering ways to regulate cryptocurrency markets with various policy initiatives . As such , investors should remain mindful of potential changes or updates being considered by regulators .
Conclusion
In conclusion , although there is no official labeling of digital assets yet according to regulatory language used by U . S . Securities and Exchange Commission , they are still actively considering various policy initiatives aimed at regulating cryptocurrency markets . Investors should be aware of any potential changes or updates being considered by regulators going forward .