Senator Hickenlooper Urges SEC to Engage in "Formal Regulatory Process" on Digital Asset Regulation
Commentary by Steven Lofchie
In a letter to SEC Chair Gary Gensler, Senator John Hickenlooper (D-CO) urged the SEC to establish comprehensive regulation for digital assets through a "transparent notice-and-comment regulatory process."
Senator Hickenlooper said that existing laws and regulations are "not designed to deal with how digital assets are being used in the market," and the absence of a coordinated regulatory framework creates "uneven enforcement" and investor confusion. According to Senator Hickenlooper, "[a]pplying the old rules to the new market could inadvertently cause financial services to be more expensive, less accessible, and the SEC's disclosure regime to be less useful to the American people."
Senator Hickenlooper urged the SEC to (i) address which digital assets are classified as securities, (ii) determine how to issue and list digital securities, (iii) determine which disclosures are necessary for investors, (iv) establish a registration process for digital asset trading platforms and (v) establish rules for custody and trading.
Commentary
For the last year, Senators Elizabeth Warren (D-MA) and Sherrod Brown (D-OH), and the heads of each of the major financial regulatory agencies, have decried the risks that they perceive in the use of digital assets. Significantly, Senators Kristen Gillibrand (D-NY), Debbie Stabenow (D-MI) and Cory Booker (D-NJ) have each proposed legislation to facilitate the development of digital asset markets. Senator Hickenlooper's remarks draw attention to the differences between these positions and indicate that there is a meaningful group of Democratic Senators that would like greater legislative and regulatory attention to developing a regulatory system tailored to digital assets.