Brief
- Wall Street heavyweights met with the SEC on Tuesday to discuss potential concerns over the agency’s crypto program.
- SIFMA, a major securities trading group, has warned that exemptions for tokenized securities and DeFi projects could destabilize markets.
- SEC Chairman Paul Atkins recently promised to make these crypto exemptions official by the end of January.
As coveted crypto market structure bill stalls In the Senate, Wall Street’s top players met with the SEC on Tuesday to discuss numerous concerns about the regulator’s permissive approach to digital assets.
Representatives from JPMorgan, Citadel and SIFMA, the powerful securities industry trade group, met with the SEC’s Crypto Working Group yesterday to discuss the agency’s bold new approach to digital assets, according to the agency. recordings.
Topics discussed at the meeting included concerns about the SEC’s imminent plans to provide exemption Buying tokenized securities could harm the U.S. economy as a whole, according to meeting minutes. These concerns have also focused on the SEC’s stated plans to exclude certain decentralized finance, or DeFi, projects from requirements to comply with U.S. securities laws.
“Regulatory treatment should be based on economic characteristics, not on the technology used or categorical labels (e.g., ‘DeFi’),” say documents distributed at the meeting, prepared by SIFMA. “Broad exemptions for tokenized trading activities could undermine investor protections and lead to market disruption.”
SIFMA specifically highlighted October crypto flash crash—the largest single-day crypto market wipeout in history, with $19 billion in liquidations– as a preview of what could happen if tokenized securities were allowed to trade outside of existing securities laws.
Representatives for Citadel and JPMorgan did not immediately respond to Decrypt» requests for comments. A representative for SIFMA declined to comment.
A source close to the matter said Decrypt that key DeFi advocates were unaware that Tuesday’s meeting had taken place.
Paul Atkins, President of the SEC said Recently, it is considering granting sweeping innovation exemptions for the crypto sector this month. Such exemptions would give crypto companies and projects assurance that they are not at risk of triggering securities law violations by experimenting in certain areas, potentially including tokenized securities and DeFi.
The SEC’s aggressive efforts to grant the crypto industry much-desired legal safeguards come as a parallel legal effort stalls in Congress. Progress on a crypto market structure bill, which would enshrine crypto protections in federal law, slowed significantly this month, after skirmishes between crypto executives and other stakeholders derailed a key Senate vote.
One of these tensions, between DeFi supporters and SIFMA, focused on the bill’s language that would exempt certain decentralized financial services and their developers from legal oversight. Progress appears to have been made in negotiations between the two parties, however, and supporters of decentralization have spoken out in favor of the status of the bill earlier this month.
It ultimately turned out to be another cross-sector battle that posed a more existential threat to the bill’s fate: one between Coinbase and the banking lobby on rewards for stablecoin holdings.
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