Key Highlights
- The SEC’s recent guidance on crypto assets leaves uncertainty about when investment contracts end.
- SEC Chair Paul Atkins says the guidance is a starting point and the agency will work with innovators.
- Permanent clarity requires Congress to pass laws, as current guidance remains open to interpretation.
The U.S. Securities and Exchange Commission (SEC) recently issued guidance on how federal securities laws apply to cryptocurrencies and other digital assets. However, there are still questions yet to be answered, particularly about when a token’s status as an investment contract ends.
In a post on X on Thursday, reporter Eleanor Terrett noted that securities lawyers say the guidance remains largely subjective. This is significant because breaking securities laws is often treated as strict liability, meaning people or companies can face penalties even if they did not intend to break the law.
Atkins explains SEC’s approach
In an interview with Crypto In America, SEC Chair Paul Atkins said that the agency wants to make the rules clearer over time as the market grows.
“We are happy to talk to people about it, and there are obviously lawyers out there as well, who can give advice,” Atkins said. He added, “As time goes on, and more people are doing things, it will become clearer … if you look at what we put out, there’s a lot of description as to examples of how things could go away, and what and when things start up.”
Atkin also said that the SEC is ready to work with innovators in the crypto space to provide guidance without creating unnecessary obstacles.
“We definitely want to work with them and make sure that we can put them at ease. It’s not a booby trap here,” he said. His comments underline the agency’s goal to provide clarity while acknowledging that practical interpretation may take time as the market evolves.
68 pages of guidance and limitations
The guidance is part of a broader effort by the SEC and the Commodity Futures Trading Commission (CFTC) to explain how digital assets are regulated.
Last week, the agencies released 68 pages of guidance, including a token classification system. It divides digital assets into stablecoins, digital commodities, and “digital tools,” which are generally not considered securities. The document also provides examples to help investors and developers understand when an investment contract might end.
While the guidance gives some clarity, legal experts note that it is still open to interpretation in important areas. SEC Chair Atkins said the guidance is a foundation, not a final set of rules. Only Congress can provide permanent certainty through laws. Previous attempts at legislation, such as the Clarity Act, have stalled, leaving regulators to guide the market through interpretive guidance.
For now, investors and companies are advised to consult legal professionals before engaging in crypto transactions that could fall under federal securities laws.
Also Read: Crypto Exchanges Breathe Easy as SEC Narrows Rule 15c2-11 Scope
