Securities and Exchange Commission (SEC) Commissioner Mark T. Uyeda said in a fireside chat at the Korea Blockchain Week 2024 event in Seoul on Tuesday that the agency needs to create a superior S-1 registration form for digital asset securities.
The S-1 form is a registration statement that U.S. issuers must file with the SEC before offering new securities. It contains various disclosures, such as income statements and cash flow statements.
Uyeda used registered index-linked annuities to explain that the SEC’s standard registration forms may not be appropriate for certain financial products. He said the SEC works with product sponsors to develop customized registration requirements.
“Well, why shouldn’t we do the same thing for cryptocurrencies, digital asset securities?” Uyeda said. “We have the flexibility to do that, and that’s partly my frustration that we haven’t done more to accommodate sponsors who have concluded that these types of digital assets are securities.”
Uyeda said the SEC cannot afford to create a “catch-22 situation” where it requires digital asset securities sponsors to register and disclose information that is irrelevant or impossible to do.
However, Uyeda said these filings come after the issuer’s analysis and determination that the product is a security under federal regulations. While digital asset-backed securities, such as tokenized bonds or cryptocurrency exchange-traded funds, are subject to SEC oversight, it remains unclear whether cryptocurrencies are classified as securities.
“The term ‘crypto asset security’ is nowhere to be found in any law. It’s a fabricated term with no legal basis. The SEC should stop trying to fool judges by using this term,” Ripple’s chief legal officer Stuart Alderoty told X yesterday.
Ripple has been embroiled in a legal dispute with the SEC over the classification of certain digital assets as securities. Along with many other companies such as Coinbase, Ripple has argued that the SEC has not provided sufficient regulatory clarity.
When asked about his opposition to the SEC’s rejection of Coinbase’s rulemaking petition, Uyeda said the SEC needs to clarify what is and is not a security when it comes to digital assets.
“I think at some point, whether it’s Gensler or his successor, they’re going to have to think about what kind of legislation or rulemaking they should pursue, given the significant regulatory uncertainty around digital assets,” Uyeda said.
However, digital assets were not among the more than 50 items SEC Chairman Gary Gensler added to the regulatory agenda during his tenure. Uyeda added that Gensler has the final say on adding new items to the regulatory agenda.
Uyeda added that the SEC should consider jurisdictions around the world, including the EU, South Korea, and Japan, when formulating future rules for digital assets.
Uyeda, one of five SEC commissioners whose term runs through June 2028, has said his views are personal and do not necessarily reflect those of the agency as a whole.
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