SEC Commissioner Advocates for Customized Digital Asset Registration

• SEC’s Mark Uyeda calls for tailored S-1 registration for digital asset securities.
• Uyeda criticizes the lack of progress in accommodating digital asset sponsors.
• Ripple and Coinbase urge the SEC to provide more regulatory clarity on digital assets.

At the Korea Blockchain Week 2024 event, SEC commissioner Mark T. Uyeda emphasized the need for the agency to create a specialized S-1 registration form for digital asset securities. He urged the SEC to develop more suitable registration requirements for these assets.

Currently, U.S. digital asset issuers must complete a standard S-1 registration form before offering new securities products. This form requires detailed financial disclosures, such as income and cash flow statements, which may not be relevant for all digital assets.

Uyeda pointed out that the agency has successfully collaborated with product sponsors in the past to create customized registration requirements, like the registered index-linked annual incomes. He believes a similar approach should be adopted for digital asset securities. Uyeda noted:

“We have the flexibility to do that, and that was in part, expressing my frustration in that we have not done more of that to accommodate sponsors of these types of digital assets that they have concluded as securities.”

The SEC commissioner also cautioned against creating a “catch-22 situation” where digital asset securities sponsors are required to register and provide disclosures that aren’t applicable to their products.

Uyeda’s comments underscore the industry’s need for regulatory clarity around digital assets. The classification of digital assets as securities or not remains a contentious issue.

Ripple’s Chief Legal Officer, Stuart Alderoty, recently criticized the SEC on X for using the term “crypto asset security,” arguing that it’s a fabricated term without legal basis.

The SEC is currently involved in legal battles with several industry players, including Ripple and Coinbase, over the classification of digital assets as securities. These companies argue that the SEC needs to provide clearer regulatory guidelines.

Concerns have also been raised about SEC Chairman Gary Gensler’s approach to digital asset regulation. Gensler’s extensive regulatory agenda, with over 50 items, does not include specific provisions for digital assets.

Despite these challenges, Uyeda remains optimistic that the SEC can find a solution to the regulatory uncertainty. He also encouraged the agency to consider international models in its approach to crypto asset regulation.