Although we are still awaiting a number of formal rulemakings and proposed rulemakings from federal securities and commodities regulators, last week’s memorandum is another sign that the SEC and CFTC are at least serious about signaling these efforts.
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Explanation
The U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission agreed to work together to formally clarify how they will monitor crypto and other issues.
why it matters
The agencies have been consistently signaling that their previous regulatory dispute has ended, and have provided a clarification on how they will jointly approach rulemaking – a welcome sign for the crypto industry.
break it
The SEC and the CFTC last week signed a memorandum of understanding aimed at combining their regulatory approaches to digital assets and other emerging technology sectors. According to the memorandum, the agencies will hold regular joint meetings, share data and otherwise communicate their efforts to oversee the digital asset sector.
“More than aligning our rules, a harmonized framework also demands coordination of our responses to firms that operate within it that have questions of interpretation or request waiver relief,” SEC Chairman Paul Atkins said in prepared remarks earlier this week.
The main suggestion here: The SEC and CFTC will coordinate how they are both defining a digital asset as a security or non-security, in a way they did not do two years ago.
One goal of the memo is for agencies to “clarify product definitions through joint interpretations and rulemaking.”
The memo also said the agencies would update their regulatory frameworks for regulated companies in several areas, including clearing and margin, trading data and intermediaries.
Bloomberg reports that this reconciliation effort could extend beyond just crypto – the regulator is considering moving into an office building (the SEC).
While the SEC and CFTC are making efforts to merge their approaches in this area, the agencies and broader industry participants are still waiting to see what happens with the market structure bill that is currently working its way through the Senate. Senate Majority Leader John Thune told Punchbowl News earlier this week he did not expect the bill to pass through the Senate before the “April time period.”
Congress is just a week away from its two-week Easter recess, meaning that even if members of the Senate Banking Committee come to an agreement to advance the bill, sheer logic means the Senate is unlikely to have time to get the bill up in the immediate future. While I’m not sure how much this will impact the Senate’s work on market structure, it’s also worth noting that lawmakers are still negotiating a bill to fund the Department of Homeland Security, and President Donald Trump has said he wants Congress to pass the Safeguard American Voter Eligibility Act (SAVE Act) before signing another bill. However, reports suggest that none of these efforts are likely to pass immediately.
this week
- No hearing has been scheduled as of press time. My colleague Jesse Hamilton and I will be attending the Digital Chamber’s conference in Washington. Come say hello!
If you have ideas or questions about what I should discuss next week or have any other feedback you’d like to share, feel free to email me [email protected] Or find me at Bluesky@nikhileshde.bsky.social.
You can also join group conversations on Telegram.
See you next week!