Execs share ‘wish lists’ for SEC at agency’s second crypto roundtable
Panelists from Coinbase, Uniswap Labs and NYSE were among those making recommendations on crypto trading rules
Coinbase Head of International Product Greg Tusar | Permissionless II by Blockworks
This is a segment from the Forward Guidance newsletter. To read full editions, subscribe.
The SEC has done a lot between Gary Gensler’s January departure and Paul Atkins’ confirmation last week.
Some of the most recent actions are statements on crypto-related disclosures from the agency’s Division of Corporation Finance. And the SEC again asked the court to pause its litigation with Binance.
But the SEC’s most meaningful move in recent months? The agency’s swift creation of a crypto task force and corresponding roundtable meetings, according to StoneTurn partner Kyla Curley.
The roundtables are especially crucial, given they “extend well beyond the perspectives and objectives of the regulators and lawmakers by including stakeholders in all aspects of the industry,” Curley told me.
The SEC’s second crypto roundtable, hosted last Friday, focused on tailoring regulation for crypto trading. The panelists came from a range of employers, including centralized giant Coinbase and decentralized player Uniswap Labs. Speakers also included legal experts and a leader from the New York Stock Exchange.
SEC Acting Chair Mark Uyeda acknowledged (in a pre-recorded virtual appearance) some challenges. For example: While national securities exchanges can only list registered securities, most tokenized securities in the market today are unregistered.
Compliance with the “order protection rule” may not be possible for various tokenized or non-tokenized securities trading in on- and off-chain markets, he added. There’s also the fact that crypto trading platforms (unlike securities exchanges) might handle custody, execution and clearing.
At one point, the panelists were asked about their main wishes in regards to upcoming SEC actions.
NYSE chief product officer Jon Herrick had a general ask: “precision” on the problems to solve (rather than starting with a solution and then searching for issues it can clear up).
Texture Capital CEO Richard Johnson said the goal should be getting to a point where we use blockchain as the official record of ownership for securities; we use smart contracts for settlement; and we use stablecoins/tokenized Treasurys for the cash leg of securities transactions.
Coinbase’s Gregory Tusar got a bit more specific, asking for a “holistic and integrated” market structure that allows securities and commodities to trade side by side.
“When we have the conversation about securities and commodities, it sort of leads us to believe that there are these very clear swim lanes,” he said. “But in actual fact it’s nowhere near going to be that clean and precise.”
Some panelists went a step further, with Johnson and Urvin Finance co-founder Dave Lauer saying the SEC and CFTC should merge.
Austin Reid, FalconX’s head of revenue and business, noted that regulatory consolidation would unlock innovation and allow US firms to better compete globally. He noted that firms like FalconX and Coinbase, for example, could find themselves working with more than 50 regulators (the SEC, CFTC, US states and agencies in other regions).
Uniswap Labs chief legal officer Katherine Minarik also urged the commission to not deliberately (or accidentally) hinder the future potential of DeFi tech by requiring it to act like centralized finance.
Her wish was thus: “For the SEC to be a champion for the importance of peer-to-peer transactions, self-custody technology and the value of the privacy and safety to everyday people that can come from that type of technology.”
Chelsea Pizzola, associate general counsel at Cumberland DRW, said that while many in the industry are optimistic for crypto legislation, the SEC shouldn’t wait for that to offer more guidance and/or rulemaking. She’d love to see the commission clarify instances in which secondary market transactions would or wouldn’t fall within their jurisdiction, for example.
Pizzola’s first point echoed Uyeda’s earlier comment that “a time-limited, conditional exemptive relief framework for registrants and non-registrants” could boost US blockchain tech innovation while the SEC develops a long-term solution.
Next up is an April 25 roundtable on crypto custody considerations. Here’s to the ongoing back and forth.
Get the news in your inbox. Explore Blockworks newsletters:
- The Breakdown: Decoding crypto and the markets. Daily.
- Empire: Crypto news and analysis to start your day.
- Forward Guidance: The intersection of crypto, macro and policy.
- 0xResearch: Alpha directly in your inbox.
- Lightspeed: All things Solana.
- The Drop: Apps, games, memes and more.
- Supply Shock: Bitcoin, bitcoin, bitcoin.
