The U.S. Securities and Exchange Commission has taken a notable step toward reshaping how cryptocurrencies are regulated, sending a proposed interpretive guidance to the White House Office of Management and Budget for review.
The move appears to suggest a possible shift in perspective when it comes to a large part of digital assets not being considered a form of security, which would likely reduce some of the burdens associated with complying with regulations within the crypto space.
Based on market reports from Tuesday, the proposal appears to be listed as “pending review.” The proposal, if implemented, may be a major milestone in terms of crypto regulations within the United States, particularly when considering definitions surrounding different forms of tokens.
What does the proposal include?
One of the significant features of the proposal is the creation of a classification system that is dubbed a “token taxonomy.”
In the new classification under the proposed system, the SEC has classified tokens in four major classes: digital commodities, digital instruments, digital collectibles such as non-fungible tokens or NFTs, and stablecoins that are deemed to be outside the scope of securities.
The proposed system is meant to provide a more predictable set of rules for the digital asset market.
The goal is to create more predictable rules for the fast-growing digital asset market, while acknowledging that not all tokens function in the same way.
The criteria set out in the framework indicate when a digital asset could be considered an investment contract, depending on the way in which it is issued or promoted.
At large, there are efforts to make distinctions between tokens that are considered to be for payment purposes and those that are considered to be investments.
Market view on the move
Many experts believe that the move is a stepping stone for further action by lawmakers to pass comprehensive legislation. The SEC has already been taking steps to lay the groundwork for closer cooperation with the Commodity Futures Trading Commission, with a future system in mind in which there is shared oversight between regulators.
Ongoing talks in Washington, D.C., are still underway regarding the proposed CLARITY Act, which is designed to provide a comprehensive framework for digital asset markets.
At present, lawmakers have made significant headway in addressing several key issues, including stablecoins, though no announcement has been made regarding a timeline for debate in the Senate.
Market participants are likely going to keep an eye on any developments from the White House in order to access stablecoin laws in the near future.