The SEC staff signals a new era for cryptocurrency ETFs

Securities and Exchange Commission Announce A new cryptocurrency task force is dedicated to developing clear regulatory frameworks, marking a shift away from its previous enforcement-focused approach to digital assets.

The initiative, announced by acting SEC Chairman Mark T. Ueda and led by Commissioner Hester Peirce, arrives as fund issuers await clearer guidelines for launching investment products — a development that could reshape how companies approach digital asset offerings after… Years of regulatory uncertainty.

The task force will collaborate with various SEC divisions, other federal agencies and the public to establish reasonable regulatory paths, according to the SEC announcement. Under Pearce’s leadership, the group aims to provide realistic pathways to registration and formulate sensible disclosure frameworks.

“One of the task force’s directives will be to create a clear registration path for cryptocurrency market participants,” Amy Lynch, founder and president of strategy consulting firm FrontLine Compliance, told etf.com in an email. “Although the current path is already in place, the process has a lot of room for improvement.”

The task force aims to address custody rules that have previously hindered cryptocurrency product innovation, according to Lynch. “The current custody rules that exist do not take into account cryptocurrencies or digital assets,” she said.

Lynch noted that the proposed custody rule from 2023 attempted to address digital assets but “falls far short of what the market needs.” The staff may review these requirements through the Investment Management Division of the Securities and Exchange Commission.

Coordination between regulatory bodies will play a key role as the framework develops. “There will be coordination with the (Commodity Futures Trading Commission) especially if the definition of a security is updated to add clarity when cryptocurrencies are a security and when they are a commodity,” Lynch explained.

While organizational changes take time, Lynch suggests that the initiative opens up new opportunities. “The floodgates are now open, and now is a good time to send money for orders as we will see more digital asset ETFs coming to the market in the coming year,” she added.

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