Crypto Shenanigans: SEC Task Force Meets to Tackle Staking and Other Mysteries

by

In a most curious turn of events, the US Securities and Exchange Commission’s Crypto Task Force, a group that sounds like it was plucked straight from the pages of a detective novel, convened with a motley crew of representatives from both the cryptocurrency and traditional finance sectors. This gathering, which took place in the frosty embrace of early February, was ostensibly to discuss the regulatory conundrums that are currently plaguing the digital asset realm. Key topics of discussionincluded staking (not to be confused with the act of propping up a rickety fence), the need for clear guidelines regarding exchange-traded products (ETPs), and a shiny new framework for keeping an eye on this emerging asset class. 🕵️‍♂️

According to the rather official-looking memoranda available on the SEC’s website, the Crypto Task Force had a tête-à-tête with the Blockchain Association, an industry lobby group, on the 4th of February. The lobbyists, in their infinite wisdom, suggested six priority areas for the task force to focus on, presumably while sipping tea and nibbling on biscuits, to “tackle issues that impact the digital asset industry.” 🍵

Among the requests was a plea for the SEC to adopt a pro-innovation approach to broker-dealers, custodians, and exchanges, which sounds rather like asking a cat to befriend a mouse. They also wanted uniform ETP standards and a guarantee that protocol staking would not be classified as a security. Because, you know, who wants to be classified as a security? It’s like being told you’re not quite a person. 😼

On the 5th of February, representatives from Jito Labs and Multicoin Capital, who sound like they might be characters in a spy thriller, met with the Crypto Task Force to discuss the possibility of adding staking to ETPs. They described staking as the “true nature” of proof-of-stake tokens, which is a bit like saying that the true nature of a cat is to knock things off tables. 🐱

When the SEC approved spot Ether (ETH) exchange-traded funds last year, they asked issuers to remove the ability for funds to earn staking rewards. However, Jito and Multicoin Capital, in a display of optimism that would make a puppy proud, suggested that the SEC staff might now be open to revisiting staking in ETH and other crypto asset ETPs. Perhaps they were just waiting for the right moment to pounce! 🐾

Also on that fateful day, the task force had a chinwag with the capital management group of Andreessen Horowitz, known as AH Capital Management. The discussion revolved around token classification and issuance, which sounds like a riveting topic for a dinner party. 🍽️

A separate SEC document revealed that the Crypto Task Force met with representatives from Nasdaq on the 6th of February. In addition to seeking regulatory clarity for digital assets, the SEC was asked to clarify the “venues” permitted to trade cryptocurrencies. “It is appropriate to allow non-securities digital assets to be traded alongside securities in the same venues,” the Nasdaq representatives declared, as if they were announcing the latest fashion trend. 👗

Finally, on the 7th of February, the bankruptcy law firm and former FTX counsel Sullivan & Cromwell sent Colin D. Lloyd to meet with the task force to discuss blockchain technology and securities law. One can only imagine the riveting conversations that ensued! 🥱

A new dawn for crypto regulation

With the election of Donald Trump, expectations have soared like a kite in a gale regarding a major policy shift for the US digital asset sector. The SEC’s Task Force, led by the pro-crypto Commissioner Hester Peirce, was established on President Trump’s second day in office, which is either a stroke of genius or a sign of impending chaos—time will tell! ⏳

Peirce has vowed to clean up the “mess” left behind by former SEC Chair Gary Gensler, who, during his tenure, brought more than 125 enforcement actions against the industry. One can only imagine the paperwork involved! 📄

On the 11th of February, the US House Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence heard from

2025-02-14 22:16