Thread by @TuongvyLe12

To the @SECGov staff who know that crypto assets and services, by their very nature, can’t comply w/ existing securities regs, but feel they have no choice but to bring enforcement actions under existing law: there is a better way.

In the ‘90s, Congress gave the SEC broad authority to exempt entire classes of securities from the federal securities laws. And the SEC has used it. In 2004, asset-backed securities – securities backed by things like mortgages – were new, but had quickly grown to a $416B market.

After years of ABS no-action letters and feedback to ABS issuers on their registration applications, the SEC finally recognized that a new set of rules was needed - the existing ones simply didn't work given ABS' unique features.

SEC said ABS “differ from corporate securities & operating companies – there is generally no business or management to describe. Instead, information about the transaction structure and the quality of the asset pool and servicing is often what is most important to investors.”

SEC also recognized that “many of the Commission’s existing disclosure and reporting requirements, which are designed primarily for corporate issuers, do not elicit the information that is relevant for most asset-backed securities transactions.”

So in 2004, SEC passed a registration, disclosure, & reporting regime that made sense for ABS, amended it in 2015, and just this January proposed another amendment. All through a fair & public rulemaking process. What DIDN’T it do? Bring 120+ enforcement actions w/ little more.

The $1T+ crypto asset class differs from traditional securities even more: it’s based on groundbreaking new technology and has novel governance systems, structures, and uses (think DAOs, wrapped tokens, staking) that demand even more tailored regulations & disclosures than ABS.

So much so that Congress should pass new legislation entirely. But barring that, SEC should do what it’s done before: use the exemptive power granted to it by Congress to craft a workable regime that protects investors while preserving capital formation in this emerging industry.

Which is, by the way, precisely what much of the rest of the world is doing. #EU #MiCA #UK #Japan #SouthKorea #Canada #HongKong #Singapore #Australia

Where is crypto being banned or met with only crackdowns? #China