Sen. John Hickenlooper (D-Colo.) is urging the Securities and Exchanges Commission (SEC) to issue regulations for digital asset securities through a transparent notice-and-comment regulatory process.
In a letter sent to the SEC on Thursday, Hickenlooper wrote that existing laws and regulations do not apply to how crypto assets are being used on the market.
He said the lack of a coordinated regulatory framework can create “uneven enforcement” and deprive potential investors “a clear understanding of how they are protected from fraud, manipulation, and abuse.”
The lawmaker asked the agency to clarify what types of digital assets are securities, address how to issue and list digital securities, establish a registration service for digital asset security trading platforms, set regulations on how trading and custody of digital assets should be carried out, and determine what disclosures are required for potential investors to be informed about.
“Given the complexity of these issues, and recognizing that some digital assets are securities, others may be commodities, and others may subject to a completely different regulatory regime, a formal regulatory process is needed now,” Hickenlooper wrote in his letter. “This will significantly improve policy development and allow the SEC to collect views and understand concerns. Furthermore, it will create clear rules that will benefit investors who currently may not be fully aware of the risks associated with digital asset investments.”
Hickenlooper’s letter comes a week after the SEC announced that has reached a $1.26 million settlement with celebrity entrepreneur Kim Kardashian for promoting a cryptocurrency service while not disclosing to the agency that the company paid her for the promotion.
The agency released a statement in 2017 urging caution for celebrities who promote investments to their followers, also warning about disclosure requirements under federal law.
Hickenlooper also wrote that applying old market regulations to cryptocurrency would lead to financial services being more expensive and less accessible; leading to the agency’s disclosure regime being less useful to U.S. residents.
“I recognize these questions are complicated, but it is time for the SEC to engage. Empowering innovators, fostering financial innovation, protecting investors, and ensuring market integrity are consistent principles,” the lawmaker concluded in his letter. “I look forward to working with you to build prudent rules as this powerful technology continues to develop.”