Cryptocurrency and stablecoin anxieties on display the past ten days haven’t destabilized the generally quiet way Washington has embraced digital asset policy questions the past two years. Legislation this year seems unlikely but most of our discussions on and around Capitol Hill this week point to the SEC implementing investor protection rules before next year.
SEC Chair Gary Gensler in a speech on Tuesday analogized some digital asset offerings from financial institutions to supermarket checkout aisles “activating our impulses to purchase things we may not need.” He referenced Journal of Retailing and Consumer Services research showing that such purchases account for 62% of supermarket sales.
Gensler was addressing an annual policy gathering of securities professionals which explains why much of his talk focused on “client best interest” obligations. He closed by praising the promise blockchain innovations represent, and reiterating that investments made in assets sold by “entrepreneurs” are either an investment contract or security, both of which the SEC regulates. Gensler also wants investor protection rules for the $100 billion daily crypto trading and lending markets.
We expect a multi-year iterative digital asset rulemaking process. The SEC and possibly the CFTC seem poised to start the process this year, but Treasury and bank regulators likely will work with Congress next year on broader rules dealing with payments and stablecoins, for example. While partisanship could become a hindrance in divided government, algorithmic stablecoin crashes this month showed most politicians don’t want to own the blowback from the downsides of digital assets.
We are pleased Tim Massad will join us on Monday, May 23rd at 10:30 a.m. ET for a 22V client webinar on the outlook for digital assets rulemaking. Tim is the former chairman of the Commodity Futures Trading Commission, and a former assistant secretary for the US Department of Treasury. We hope you can join us for a 30-minute discussion with Tim during which we’ll take as many of your questions as time permits. Please register HERE. If are unable to join and would like the replay link, please ask us. Thanks.
