ICI Calls for Technology-Neutral Regulation of Digital Assets
"[R]egulatory uncertainty has hindered further progress in the field. Clearer guidance from the SEC would encourage broader participation in digital asset markets."
ICI Letter to the SEC Crypto Task Force
"[R]egulatory uncertainty has hindered further progress in the field. Clearer guidance from the SEC would encourage broader participation in digital asset markets."
ICI Letter to the SEC Crypto Task Force
The Investment Company Institute ("ICI") urged the SEC to establish a clear, technology-neutral framework to govern digital assets and tokenized investment products.
In a comment letter to the SEC Crypto Task Force, the ICI said that its members are leading the development of blockchain-based investment products, including tokenized money market funds and exchange-traded products. The association said its members remain constrained by ongoing regulatory uncertainty, particularly regarding asset custody under Section 17(f) ("Custody") of the Investment Company Act. The ICI emphasized that clear, technology-neutral regulation is needed to support responsible innovation while maintaining investor protection.
The ICI recommended:
- Adopting a Technology-Neutral Framework. The ICI urged the SEC to ensure that tokenized funds and traditional funds are subject to consistent standards, preventing regulatory arbitrage and unnecessary compliance duplication.
- Ensuring a Level Playing Field. The ICI encouraged the SEC to hold new market entrants to the same regulatory standards as established participants to maintain fairness and investor protection.
- Clarifying Custody Requirements. The ICI called on the SEC to issue guidance under Section 17(f) clarifying the eligibility of custodians, parameters for self-custody, and treatment of decentralized recordkeeping. It also referenced recent no-action relief permitting state-chartered trust companies to act as crypto custodians but urged formal rulemaking for further clarity.
- Avoiding Mandatory Instant Settlement. The ICI cautioned against requiring T+0 or atomic settlement for traditional securities, noting that such a shift would be premature and resource-intensive given current market infrastructure and beyond the intended scope of the SEC’s crypto review.
- Allowing Regulatory Flexibility. The ICI advised that regulations should remain principles-based and flexible, enabling firms to develop best practices without excessive compliance burdens.
- Promoting Transparent Rulemaking. The ICI urged the SEC to continue engaging stakeholders through transparent notice-and-comment processes to ensure balanced, informed policymaking.