SEC Chair Calls for Review of Crypto Regulations

The acting head of the SEC, Mark T. Uyeda, has announced a comprehensive review of past guidance related to cryptocurrency investments and digital assets.

This move aligns with Executive Order 14192, which aims to reduce regulatory burdens, and follows recommendations from the Department of Government Efficiency. Uyeda intends to reassess whether previously issued statements still align with the SEC’s current focus.

One of the primary documents under scrutiny dates back to 2019 and offers criteria for determining whether a digital asset should be classified as a security, relying on the Howey test. This test evaluates if an investment is primarily driven by others’ efforts with an expectation of profit. The SEC recently clarified that memecoins generally don’t fall under securities regulations, making the Howey application controversial.

Another area of focus is a 2021 statement cautioning against mutual funds linked to Bitcoin futures due to the potential for market manipulation and liquidity issues. At that time, the SEC expressed doubts about the maturity of the Bitcoin futures market to support ETFs. However, since then, spot Bitcoin and Ethereum ETFs have seen substantial growth.

Uyeda also intends to revisit guidance from 2022, which urged crypto-exposed companies to disclose risks transparently following a wave of high-profile bankruptcies. Additionally, a 2021 warning about the risks associated with digital asset trading and a 2020 statement inviting industry feedback on Wyoming’s decision to allow digital asset custody by state-chartered trust companies are also under review.

Uyeda’s directive highlights the SEC’s intent to modernize its stance on digital assets, ensuring that its guidance reflects the current regulatory landscape and evolving market conditions.

Alexander Stefanov