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The SEC’s Investor Advisory Committee discussed developments and challenges in the cryptocurrency markets at a recent meeting. In his opening remarks, SEC Chair Gary Gensler stated that as crypto market capitalization continues to increase, protections for investors have yet to catch-up. He noted, “we have a crypto market now where many tokens may be unregistered securities, without required disclosures or market oversight.” He called on crypto platforms and those issuing crypto tokens to speak with the Commission about the challenges associated with registration and compliance. In her remarks, Commissioner Hester Peirce praised the approval of the first bitcoin futures-based ETF but questioned the justification for the Commission’s hesitation to approve a spot exchange-traded product. Commissioner Peirce’s remarks also focused on improving regulatory clarity and encouraging clear responses to frequent questions posed by crypto market players. She noted the current approach “facilitates enforcement actions, but it is costly and treacherous for well-intentioned developers and their lawyers.”

Meanwhile, the Federal Reserve Board, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency issued a joint statement summarizing the interagency work performed during recent “policy sprints” (preliminary analysis on various issues regarding crypto-assets) and providing a roadmap for upcoming workstreams. The focus of the “policy sprints” included developing a common vocabulary and consistent terms, identifying, and assessing key risks, and analyzing the applicability of the current regulatory framework. The statement also notes that “throughout 2022, the agencies plan to provide greater clarity on whether certain activities related to crypto-assets conducted by banking organizations are legally permissible…” Future work of the interagency group will include custody services, holding crypto assets on balance sheets, loans collateralized by crypto assets, and the issuance of stablecoins, among other areas. The group will also examine the applicability of capital and liquidity standards to crypto assets that involve U.S. banking entities.