US SEC Advisory Committee member J.W. Verret, is asking the government agency to open public comment regarding the regulation of digital assets.
The SEC and the regulation of digital assets in the US.
J.W. Verret, associate professor of law and a member of the Securities and Exchange Commission’s (SEC) Investor Advisory Committee in the US, posted a tweet explaining his action:
I filed a reg petition with the SEC to open a call for public comment re: digital asset regulation. There are nuances that SEC ignores in their speeches and "Howey" threats. Let's crowd source this and start a genesis block for 21st century reg. https://t.co/lZQXPeqq93
— Prof. J.W. Verret, JD, CPA/CFF, CVA, CFE (@JWVerret) January 18, 2022
“I filed a reg petition with the SEC to open a call for public comment re: digital asset regulation. There are nuances that SEC ignores in their speeches and “Howey” threats. Let’s crowd source this and start a genesis block for 21st century reg”.
Verret’s petition, directed to SEC Secretary Vanessa Countryman, simply asks that the SEC open a call for public comment on the need for flexibility in the application of federal securities laws and digital assets.
Verret specifies that this call for comment could function as a “genesis block” for the SEC to begin an open-sourced redesign of enforced regulations.
Howey’s test of crypto and tokens
The professor also claimed to own Bitcoin (BTC), Ethereum (ETH), and other tier 1 and tier 2 tokens that are readily available on high-level exchanges. In this regard, Verret expresses his concern as follows:
“Unfortunately and nevertheless, under the SEC’s “strategically ambiguous” interpretation of the Howey test regarding classification of investment contracts, I cannot be certain that the SEC will not in the future target one of my token holdings, under the guise of the Commission’s investor protection mission, in a manner that would ultimately cause me significant losses as a property owner”.
The Howey test has been used by the SEC since the 1940s to determine whether certain assets qualify as “investment contracts” and are considered securities.
Verret sees this type of approach on cryptocurrencies and tokens as inconsistent with the language used in the Supreme Court’s decision.
The continued referrals to Bitcoin ETFs in the US market.
While Verret has openly begun its communication with the SEC to regulate crypto and tokens, it continues to defer to Bitcoin ETFs.
Earlier this 2022, it was the turn of NYDIG’s spot BTC-based ETF, whose eventual approval was delayed until next March 16.
NYDIG Bitcoin ETF joins other proposals such as Grayscale’s to turn its Grayscale Bitcoin Trust (GBTC) into an ETF.
Currently, no spot Bitcoin-based ETFs have yet been approved in the US markets, only a few based on Futures contracts on the price of BTC.