Author: SEC Commissioner Hester M. Peirce; Translator: Deng Tong, Golden Finance
When I was a kid, my family made an annual road trip from Ohio to Maine and back. It was a different time. There were no cell phones to call for help if the car broke down. Paper maps and directions were written on scraps of paper, not cell phone apps that gave you step-by-step instructions. Forget booking a hotel online; you just looked for the sign in the distance and stopped to see if there was a vacancy. There were no podcasts or audiobooks, just a noisy radio trying to find a local station. Instead of watching videos on the back screen, my brothers and I scanned the license plates of passing cars and “collected” states in a technology-free game of road trip. Today’s road trips are very different. In most ways, technology has made them a more fun and less risky activity.
The crypto journeys that the newly announced Crypto Task Force[1] is embarking on should similarly be more fun and less risky than the ones the Commission has led the industry on for the past decade. On that last journey, the Commission refused to use the regulatory tools at its disposal and kept pumping the enforcement brakes as it lurched forward on a winding route with no one knowing where to go. But just as modern technology does not eliminate the risks of taking the open road, this new journey toward regulatory clarity remains perilous, and both the Commission and the public need to remain vigilant and aware of the risks and opportunities that may exist. I am grateful to have an excellent team of talented SEC staff accompanying me on this journey, and we look forward to engaging with the many passionate members of the public who will help us navigate this journey. With all of this help, I am hopeful that we can arrive in a better place than we ever imagined on our previous cryptocurrency journeys. Before I discuss the hopes and opportunities that the Working Group represents, let me start with some important disclaimers.
First, while I am currently entrusted with the important task of leading the SEC’s new Cryptocurrency Working Group, the views expressed are my own as a Commissioner and do not represent the views of the SEC or my fellow Commissioners. Commission positions always require a Commission vote.
Second, it took a long time to get into this mess, and it will take some time to get out of it. The Commission has been involved in the crypto industry in one form or another for more than a decade. The first bitcoin exchange-traded product application came before us in 2013, and the same year the Commission filed a fraud case involving a crypto element. [2] In 2017, we issued the DAO Section 21(a) Report, which reflected the first application of the Howey test in this context. [3] Since then, there have been numerous enforcement actions, many no-action letters, some exemptions from relief, endless talk about crypto in speeches and statements, numerous meetings with crypto entrepreneurs, many interagency and international crypto working groups, discussions of certain aspects of crypto in proposed rulemakings, consideration of crypto-related issues in reviews of registration statements and other filings, and approval of numerous SRO-proposed rule changes to list crypto exchange-traded products. Throughout this time, the Commission’s treatment of cryptocurrencies has been marked by legal laxity and commercial impracticality. As a result, many cases remain in litigation, many rules remain in proposals, and many market participants remain in uncertainty. Determining how best to unravel all of these issues, including ongoing litigation, will take time. It will involve work across the agency and in collaboration with other regulators. Please be patient. The Task Force wants to achieve good results, but we need to do so in an orderly, practical, and legal manner.
Third, the Task Force wants to get to a place where people are free to experiment and build interesting things, and where it is not a haven for fraudsters. One of the reasons that U.S. capital markets are so strong, efficient, and effective is that we have rules in place that are designed to protect investors and the integrity of our markets, and we enforce them. We have no tolerance for liars, cheaters, and scammers. As the Task Force works to help develop this regulatory framework, it will carefully consider anti-fraud protections. If the Commission finds that fraud is beyond our jurisdiction, it can refer the matter to sister regulators. If it does not fall within the jurisdiction of any regulator, the Commission can notify Congress of the loophole.
Fourth, the Task Force is working to help create a regulatory framework that both achieves the Commission’s important regulatory goals (including protecting investors) and preserves the industry’s ability to provide products and services. That framework will be within the Commission’s statutory authority, and we will work with other regulators operating within their statutory authority. Existing regulations do not allow products under our jurisdiction to compete freely. Congress has set the parameters, and the Commission will apply them. Congress has also given us waivers, and the Commission will use them where appropriate. If Congress directs the Commission to impose requirements on market participants, SEC rules will not let you do whatever you want, whenever you want. Some of these rules will impose costs and other compliance burdens that some people may find irritating, and the Commission will use its enforcement tools to pursue violations when necessary.
Fifth, Commission staff is working diligently to process applications for exemption relief, requests for no-action letters, and registration statements, but rising volumes may present challenges. Adherence to technical and legal requirements, sound legal analysis, and thorough and timely responses to staff questions help conserve Commission resources and achieve clearer regulatory goals more quickly and smoothly. As always, such diligence will help applications move more smoothly through the approval process; conversely, a lack of such diligence may result in unnecessary delays. First in does not mean first out.
Sixth, a renewed commitment to a better regulatory environment should not be viewed as an endorsement of any cryptocurrency or token. The Commission does not endorse any product or service, regardless of whether such coin or token is within our jurisdiction; there is no such thing as an SEC stamp of approval. It’s easy to issue tokens, and if people want to buy a token or product that lacks a clear long-term value proposition, they should be free to do so, but they shouldn’t be surprised if the price drops one day. In this country, people generally have the right to make their own decisions, but that wonderful American freedom is matched by the equally wonderful American expectation that people must make their own decisions, not expect the government to tell them what to do or not do, or to bail them out if they do something terrible.
Now, with those rather cursory disclaimers, let’s talk about the work the Task Force is doing in partnership with staff across the Commission’s policy divisions. We will be working with the federal government, state securities regulators, and our international counterparts. We invite builders, enthusiasts, and skeptics to join us in exploring what the final rule should be and what interim measures might help foster innovation in the meantime. Commission staff has achieved one milestone—withdrawing Staff Accounting Bulletin 121—but there is much more work to do. [4] This list is not exhaustive, nor is it presented in order of priority or expected completion.
Security Status:The status of crypto-assets under the securities laws is fundamental to addressing many other issues. The Working Group is working to examine different types of crypto-assets.
Scooping:The Working Group will work to help identify some areas that fall outside the Commission’s jurisdiction. As a first step, the staff welcomes requests for no-action letters. No-action letters typically take the form of a staff statement in which the staff does not recommend an enforcement action to the Commission in response to the specific circumstances articulated in the letter. The statement addresses the specific situation but provides the public at large with a useful window into the staff’s thinking.
Tokens and Token Offerings:The Working Group is also considering the possibility of recommending that the Commission take action to provide temporary prospective and retroactive relief for tokens or token offerings where the issuing entity or other entity willing to assume responsibility provides certain specific information, keeps that information current, and agrees not to contest the Commission’s jurisdiction in the event of a case involving allegations of fraud related to the purchase and sale of assets.These tokens would be deemed non-securities, so there would be no uncertainty as to whether they would be able to trade freely on secondary markets that are not registered with the SEC, as long as information is kept current and accurate. This approach would bridge the gap until more permanent rules or legislation are finalized. It would provide a path for existing tokens to move out of the fog of uncertainty that obscures a viable path forward and encourage greater disclosure.
Registered Offerings:The Working Group will consider working with staff to recommend that the Commission modify existing registration pathways, including Regulation A and crowdfunding, so that there is a viable path for those interested in registering token offerings.
Special Purpose Broker-Dealers:The Working Group will explore possible updates to the no-action statement for special purpose broker-dealers, which has not been successful in its current form.An initial change we may recommend is to expand the statement to cover broker-dealers that custody crypto-asset securities as well as non-security crypto-assets. We will work with the public to identify additional barriers to registration.
Custody Solutions for Investment Advisers:We will work with investment advisers to provide an appropriate regulatory framework within which advisers can safely, legally, and reliably custody client assets themselves or with third parties.
Crypto Lending and Staking:We need clarity on whether cryptocurrency lending and staking programs are subject to the securities laws, and if so, how. We plan to work to help address how to bring such programs into compliance with the law.
Crypto Exchange-Traded Products:The Commission has received a proposed rule change from an SRO to list new types of cryptocurrency exchange-traded products. The Working Group will work with staff to provide clear statements on the approach used in approving or denying these applications. The Working Group will also assist staff and the Commission in considering requests to modify certain features of existing exchange-traded products, including allowing for collateralization and physical creation and redemption. However, the Commission may have to make progress on custody and other issues before these changes can be implemented.
Clearing Agencies and Transfer Agents:The Working Group also plans to examine the intersection of cryptocurrencies with the rules governing clearing agencies and transfer agents.We will continue to work with market participants who are interested in tokenizing securities or otherwise using blockchain technology to modernize traditional financial markets.
Cross-border Sandboxes:Many cryptocurrency projects are international in nature. The Working Group is considering how to facilitate cross-border experimentation on a limited scale and temporary timeframe, and potentially on a more permanent, long-term approach.
This brief overview of how the Working Group sees the journey ahead is not exhaustive or definitive, but I hope it will be of interest to you. While there are many obstacles to ultimately developing sensible, clear rules, the journey will be exciting and rewarding if we work together. This is the beginning of a conversation—one we don’t want to have just with ourselves.
Citations
[1] Press release, “SEC Crypto 2.0: Acting Chairman Uyeda Announces New Crypto Working Group,” January 21, 2025, https://www.sec.gov/newsroom/press-releases/2025-30. [2] Press release, “SEC Charges Texas Man with Running Bitcoin-Denominated Ponzi Scheme,” July 23, 2013, https://www.sec.gov/newsroom/press-releases/2013-132. [3] U.S. Securities and Exchange Commission, Report on the Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The DAO, Exchange Act No. 81207 (July 25, 2017), https://www.sec.gov/files/litigation/investreport/34-81207.pdf.
[4] Staff Accounting Bulletin No. 122, https://www.sec.gov/rules-regulations/staff-guidance/staff-accounting-bulletins/staff-accounting-bulletin-122.
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