Analyzing the five key issues a new SEC chairman should address under Donald Trump’s potential administration, focusing on crypto regulation and innovation.
Points
- The need for staking-friendly policies for Ether funds.
- Embracing on-chain compliance solutions for securities markets.
- Upgrading KYC and custody rules for Web3.
- Bringing decentralized exchanges （DEXs） under regulatory clarity.
- Promoting the digital economy with real-world assets （RWAs）.
As the 2024 presidential election approaches, Donald Trump has suggested replacing current SEC Chair Gary Gensler with a pro-crypto industry figure. At a Bitcoin conference in Nashville on July 27, Trump emphasized the need for a new SEC chair to address five critical issues from the start.
1. Let Ether Funds Start Staking
The current regulatory framework under the Investment Company Act of 1940 poses challenges for Ether funds wanting to stake. ETFs and mutual funds are required to redeem shares promptly for underlying assets, making staking difficult due to unpredictable withdrawal timelines for staked ETH.
To facilitate staking, the SEC should consider updating regulations to accommodate the unique characteristics of blockchain technology. This change would enable Ether funds to participate in staking, providing additional income streams and enhancing the overall ecosystem.
2. Embrace On-Chain Compliance Solutions
Blockchain technology offers robust solutions for securities markets, particularly in reporting, clearing, and settlement. Distributed ledgers automatically record and settle transactions, reducing the risk of manipulation or fraud. The SEC has recognized on-chain ledgers as valid financial reports in at least one instance.
The new SEC chair should promote the widespread adoption of on-chain compliance solutions. Issuing comprehensive guidance for the use of distributed ledger technology in securities markets would streamline operations and enhance transparency.
3. Upgrade KYC and Custody Rules for Web3
Qualified crypto custodians （QCs） in the US, such as Anchorage Digital, BitGo, and Coinbase Custody, already provide insured, segregated accounts. However, incorporating elements of self-custody, like non-upgradable smart contracts and private keys, into existing QC rules could further protect investors.
Updating KYC （Know Your Customer） and custody rules to reflect the realities of Web3 technology is essential. These changes can be achieved within the existing legal framework and would strengthen investor protections while fostering innovation in the crypto space.
4. Bring DEXs Out of the Shadows
Decentralized exchanges （DEXs） remain largely unregulated, creating uncertainty in the market. The ongoing jurisdictional tug-of-war between the SEC and the Commodity Futures Trading Commission （CFTC） exacerbates this issue.
The SEC should clarify which tokens are considered securities and establish a clear registration path for DEXs trading these tokens. By setting comparable standards for risk management, KYC, and disclosures, the SEC can bring DEXs into regulatory compliance while leveraging on-chain solutions.
5. Dollarize the Digital Economy with RWAs
Tokenized money market funds and other yield-bearing real-world assets （RWAs） are beginning to gain traction. Early entrants like BlackRock’s USD Institutional Digital Liquidity Fund （BUIDL） and Franklin OnChain US Government Money Fund （FOBXX） face severe restrictions.
The SEC should foster a robust on-chain market for USD-backed RWAs. Tokenized securities must leverage blockchain’s capabilities fully, allowing them to be tradable on DEXs, accessible to user-managed wallets, and open to Web3 developers. This approach would enhance the digital economy’s growth and solidify America’s leadership in the crypto space.
Conclusion
A pro-crypto SEC chairman under Donald Trump’s potential administration could significantly impact the regulatory landscape. By addressing these five key issues, the new SEC chair can foster innovation, enhance investor protections, and promote the growth of the digital economy.
Stay informed on crypto regulations
Twitter: https://twitter.com/CryptoRegNews
解説
- Updating Ether fund staking regulations can provide new income streams for the crypto ecosystem.
- Embracing on-chain compliance solutions enhances transparency and efficiency in securities markets.
- Upgrading KYC and custody rules to reflect Web3 realities strengthens investor protections.
- Clarifying regulations for DEXs brings them into compliance and fosters market stability.
- Promoting USD-backed RWAs on blockchain can enhance the digital economy’s growth.