- The SEC does not want to define “digital assets” in relation to hedge funds and private equity funds.
- This is not the first time the SEC has not decided on a definition for a key cryptocurrency term and has referred to Ether as a security speculation.
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It’s been less than a year since we proposed a definition of digital assets, but the SEC needs more time for deliberation.
The U.S. Securities and Exchange Commission (SEC) is not ready to define “digital assets” for hedge funds and private equity funds. It’s a phrase commonly used as an umbrella term for assets such as cryptocurrencies, NFTs, etc. detailed a proposal to define a digital asset with respect to
Back in August 2022, the SEC will Proposed: “Add Question 66 to Section 4 to gather information on private equity fund investment strategies.” Become.
Instead, the SEC has gone a different route. write in The May 3 proposal proposes to define the term “digital assets” as assets issued and/or transferred using distributed ledgers or blockchain technology (“distributed ledger technology”). To do. Referred to as “virtual currency,” “coin,” and “token,” the Commission believes these terms are interchangeable.
Although this would have been the first time the SEC actually used and defined a digital asset, “the Commission and staff continue to consider the term and are currently adopting ‘digital asset’ as part of this rule.” I have not. ”
Further proposals are constantly being negotiated, including new proposals from last month. meaning Added “DeFi” and cryptocurrency “exchanges” to suggestions defined market platform. SEC Chairman Gary Gensler said:
“Undoubtedly, many cryptocurrency trading platforms are already included in the current definition of an exchange and are therefore obligated to comply with securities laws.”
The SEC has been slow to define common terms used in cryptocurrencies and has even been accused of going against the industry by not establishing a clear regulatory framework. A clear example is the November 2022 lawsuit against the SEC. sued Commission after the SEC “failed to clarify jurisdiction over digital assets and to define whether digital assets are considered securities.” A lawyer who provides insight into legal issues in the cryptospace and the metaverse commented on the lawsuit on Twitter.
2/ The SEC has moved to dismiss the lawsuit.
In response to that move, the SEC issued the following startling statement:
“Hodl Law’s own argument clarifies that the SEC has not reached a final decision on the Ethereum network or Ether.” (SEC Memo, page 11)
This is amazing.
— MetaLawMan (@MetaLawMan) February 27, 2023
MetaLawMan and more murmured: “But for some reason, the SEC has taken eight years to analyze whether Ether is a security, and it has not yet been officially decided.” Couldn’t Define, Chairman Gary Gensler rejection To discuss even a year later.
according to The Howey test’s digital asset framework defines Ether as a security, which defines ETH as an investment, which can be subject to difficult federal laws for Ethereum users. Disclosure agreements and registration of exchanges listing Ether will be required, creating problems for his DApps on the Ethereum network and exchanges listing his ETH on the Ethereum network.
Six months after questioning ETH’s security status, the SEC has classified nine cryptocurrencies as securities. This is an act that has been criticized by many in the industry as “regulation by enforcement.”