New moves by the two largest regulators in the United States suggest that the local crypto industry continues to make regulatory progress even without Congress.
The CFTC’s decision coincided with a resurgence in prices in the broader market on Friday, raising questions about whether BTC and alts surged due to regulatory developments.
SEC and tokenized shares
CryptoPotato reported on September 17 that the SEC introduced a five-year “Innovation Exception” program designed to make it easier for eligible platforms to trade tokenized U.S. stocks on-chain. It allows eligible trading venues to be exempt from certain exchange requirements and provides liquidity providers with temporary exceptions to broker registration rules.
Although tokenized shares must still offer shareholders the same fundamental rights as traditional shares, including dividends and voting rights, synthetic products that simply track the share price will be excluded.
The agency argued that the framework could enable 24/7 transactions, faster settlement, greater transparency and self-custody, while reducing barriers to blockchain-based securities platforms.
The timing was quite interesting, as it came just after the setback of the CLARITY Act, and it could convey a more important message than just regulating symbolic actions. SEC Chairman Paul Atkins previously said the agency would continue its crypto program whether or not Congress passed CLARITY.
The CFTC follows suit
The raw materials watchdog made a similar decision in submission “Regulation of Crypto Asset Transactions and Regulation of Crypto Asset Markets” to the White House Office of Information and Regulatory Affairs for review at the end of the business week. As such, it has begun the next step towards a formal crypto market framework within its existing powers.
The CFTC also issued a no-action position preventing certain software developers from being treated as introducing brokers when specific conditions are met. Chairman Michael Seling said even before the CLARITY vote that even if it stopped, his agency would use existing authority anyway to begin building a crypto market structure regime.
It should be noted that none of these proposals from the SEC and CFTC replace the CLARITY Act. Rules written by regulators are less durable than laws passed by Congress because they can be easily changed by a future administration. However, these developments may have reassured markets that the regulatory process is not back to square one.
This may be why the price of bitcoin surged on Friday after the CFTC news was released, rising from $78,000 to a two-week high of over $81,000.
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