Major TradFi industry group calls on SEC to establish open, progressive crypto rules

The U.S. Securities and Exchange Commission's Crypto Task Force met with representatives from the Securities Industry and Financial Markets Association (SIFMA), a major industry group for financial firms, on Thursday.

The SEC wrote in a memo on Thursday that the meeting focused on cryptocurrency regulatory issues, specifically addressing digital asset issuance, digital commodities and tokenized securities.

According to the agenda submitted before the meeting, SIFMA highlighted the need for a consistent regulatory approach for new services and platforms involving digital assets, but with updates to match technological advancements.

The industry group proposed expanding and adapting existing disclosure regulations to cover new types of securities, particularly those involving digital assets.

Regarding digital commodities and tokenized securities, SIFMA stated that the SEC should ensure that different functions — such as exchange and broker-dealer, or trading and custody — are kept separate, while promoting competition and interoperability among service providers. Meanwhile, it said direct retail participation in trading digital securities and commodities should be limited.

The industry group noted that a new framework for the issuance and trading of digital securities should be developed openly and transparently, with careful construction of the "foundational" definition of securities and digital commodities.

SIFMA also suggested that digital assets legislation should take a holistic approach, incorporating technological updates to statutory texts and including provisions for cross-border applicability.

"Rulemaking should account for transitional and hybrid arrangements," SIFMA said, indicating a growing demand from traditional finance players to adopt digital assets into their products and services.

SIFMA represents hundreds of financial service providers, including broker-dealers, investment banks, and asset managers. According to its website, its broker-dealer members comprise nearly 90% of U.S. market share by revenues and 80% of financial advisors managing $13 trillion of client assets. 

Earlier this week, the industry group urged the SEC to deny digital asset companies the opportunity to offer tokenized equities through specific exemptive relief and instead adopt a more transparent approach.

It expressed concern that digital asset firms are exploring tokenized equities offerings with no-action or exemptive relief, which entails exemption from SEC enforcement actions, and called on the SEC to reject such requests.

"SIFMA therefore urges the SEC to reject the firms' requests for no action or exemptive relief and instead provide for robust public process that allows for meaningful public feedback before it makes any decisions regarding the introduction of new trading and issuance models," the industry group said. 

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