A prominent crypto advocacy organization, the Digital Chamber’s Token Alliance, has called on the United States Securities and Exchange Commission (SEC) to undertake a comprehensive review of all crypto-related investigations, Wells notices, and ongoing lawsuits starting from the first day of the upcoming Trump administration. The Alliance, which includes Trump’s nominee for SEC chair, Paul Atkins, as an advisory board member, views the new administration as a pivotal chance to mend the SEC’s historically strained relations with the digital asset sector.
Rethinking SEC’s Approach to Crypto Regulation
The Token Alliance emphasized the necessity of building mutual trust between the digital asset industry and the SEC. They believe that most participants in the digital asset space are committed to responsible operations and that the SEC should acknowledge this commitment by adjusting its regulatory stance. This call comes amid ongoing SEC legal confrontations with major industry players like Binance, Coinbase, Consensys, and Ripple, and with recent Wells notices issued to Uniswap and Immutable, potentially impacting a wide range of tokens and the broader industry.
The Digital Chamber proposed several priorities for the SEC’s first 90 days under the new administration:
- Pause on Non-Critical Litigation: The group suggests that the SEC should request stays on ongoing litigation cases that do not involve fraud, investor loss, or risk of imminent harm. This would provide the SEC with the opportunity to finalize its regulatory approach.
- Reevaluation of Existing Frameworks: A significant recommendation is the rescission of the 2019 framework regarding the application of the Howey test’s investment contract argument to digital assets and discontinue referring to the controversial Hinman speech for such analyses.
- Overturning SAB 121: The advocacy group also calls for the rescission of the SEC’s Staff Accounting Bulletin 121 (SAB 121), which mandates that SEC-reporting entities that custody cryptocurrencies must record those holdings as liabilities on their balance sheets. This rule has been criticized for burdening the market and potentially driving U.S. investors to seek riskier offshore custodial solutions.
With SEC Chair Gary Gensler, known for his regulation-by-enforcement approach, set to step down on January 20, Paul Atkins is tipped to succeed him. Atkins’ previous tenure as an SEC commissioner from 2002 to 2008, coupled with his current advisory role with the Digital Chamber, may influence the SEC’s future direction significantly. The Alliance’s policy proposals have already been presented to SEC commissioners Hester Peirce and Mark Uyeda, indicating serious engagement on these issues.
| Date | Event or Proposal |
|---|---|
| Day 1 of New Administration | Comprehensive review of all crypto-related SEC activities |
| First 90 Days | Prioritize reassessment of non-critical litigation and regulatory frameworks |
| Ongoing | Debate and potential rescission of SAB 121 and other regulatory measures |
What The Author Thinks
The initiative by the Digital Chamber’s Token Alliance to push for a reassessment of the SEC’s approach to cryptocurrency highlights a critical dialogue about fairness and innovation in financial regulation. As the digital asset landscape evolves, the need for regulatory frameworks that both protect investors and foster innovation becomes increasingly apparent. This balance is essential for the continued growth and mainstream acceptance of cryptocurrencies. The upcoming changes in the SEC leadership and the proactive stance of industry advocates may herald a new era of regulatory practices that could define the future trajectory of cryptocurrency regulation.
