SEC Submits Guidance on Applying Securities Laws to Crypto

• The U.S. SEC submitted commission-level guidance to the White House to explain how securities laws may apply to crypto assets.
• The CFTC also proposed regulatory measures for prediction markets.

The U.S. Securities and Exchange Commission (SEC) has shared a new framework with the White House that explains how federal security rules apply to different types of cryptocurrencies, aiming to provide clearer guidance for crypto companies and investors navigating U.S. regulations. Also,  the Commodity Futures Trading Commission (CFTC) submitted regulatory proposals related to prediction markets.

On March 3, the SEC submitted a Commission-level guidance titled “Commission Interpretation on Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets.” The framework is currently in the pre-rule stage and is undergoing review by other government agencies

According to the White House’s Office of Information and Regulatory Affairs (OIRA), only a little information has been disclosed thus far. According to reports, the framework will most likely focus on developing a “token taxonomy,” a system for categorizing crypto assets to determine which are considered securities under SEC laws and which may be treated differently.

This level of detail may have an impact on how crypto companies register with regulators, fulfill disclosure obligations, operate their businesses, and interact with investors. As commission-level guidance, it does not require a vote from the SEC and is often regarded as more actionable.

Regulatory Focus Expands to Prediction Markets

In addition, the Commodity Futures and Trading Commission submitted measures related to Prediction Markets to the White House on March 2. The Prediction Markets refer to contract markets that allow bets on the outcomes of specific events such as election results, sports games, and geopolitical incidents.

Before this, the U.S. SEC had warned that some prediction market contracts could fall under federal securities laws, which indicates that multiple regulators are keeping a close eye on this rapidly growing space. Further, it added that SEC Chair Paul Atkins described prediction markets as a “huge issue” and stated that there is some overlap with commodity market regulators due to the complexities surrounding the issue.

With that, as crypto and prediction markets continue to appear, U.S. regulators are stepping up efforts to define clearer boundaries and oversight frameworks

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