SEC crypto task force engages industry on staking and ETPs

The U.S. Securities and Exchange Commission’s (SEC) Crypto Task Force has engaged with representatives from the cryptocurrency and traditional finance sectors to discuss regulatory issues impacting digital assets.

These discussions, held in early February, centered on staking, clear guidelines for exchange-traded products (ETPs), and establishing a new regulatory framework for the asset class.

According to memoranda available on the SEC’s website, the Crypto Task Force met with the Blockchain Association on February 4.

The lobby group suggested six priority areas for the task force, including establishing regulatory principles and clearer guidelines, adopting a pro-innovation approach to broker-dealers, custodians, and exchanges, establishing uniform ETP standards, and ensuring protocol staking is not classified as a security.

The Blockchain Association also requested the SEC "review and correct erroneous interpretations of law" made by the previous administration.

On February 5, representatives from Jito Labs and Multicoin Capital discussed with the Crypto Task Force the possibility of adding staking to ETPs.

They described staking as the "true nature" of proof-of-stake tokens.

The SEC had previously asked issuers to remove staking capabilities from spot Ether exchange-traded funds upon approval.

"We understand the [SEC] Staff may now be amenable to revisiting staking in ETH and other crypto asset ETPs, including in connection with new applications filed for a SOL ETP," Jito and Multicoin Capital stated.

Also on February 5, the task force met with Andreessen Horowitz’s capital management group, AH Capital Management, to discuss token classification, issuance, and market intermediaries.

On February 6, representatives from Nasdaq requested the SEC clarify the "venues" permitted to trade cryptocurrencies, suggesting that it is appropriate to allow non-securities digital assets to be traded alongside securities in the same venues to allow for consistent rule sets.

On February 7, Sullivan Cromwell discussed blockchain technology and securities law with the task force.

These meetings occurred following the establishment of the SEC's Crypto Task Force, led by Commissioner Hester Peirce, and amid expectations of a potential policy shift in the U.S. digital asset sector.

Peirce has expressed her intent to address the "mess" left by former SEC Chair Gary Gensler.

Simultaneously, the US House Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence convened a hearing on February 11 to discuss the future of crypto regulations in the country.