Hester Peirce, member of the United States Securities and Exchange Commission (SEC) and head of the encryption working group, indicated that, if the CLARITY Bill was passed in Congress, the SEC would take on a large number of new rule-making tasks, for which preparations had begun within the institution. This legislation may also reshape the future division of labour between SEC and CFTC over digital assets.

Coordination will be initiated after the adoption of the bill

According to Pairce, the SEC is assessing how internal collaboration needs to be organized after the Bill has landed. She noted that once asset classifications and definitions were incorporated into the law, subsequent regulatory implementation would also revolve around that framework, and that current legislative progress would therefore have an impact on years to come.

In her view, the pressure came not only from the number of new rules, but also from coordination arrangements between the various sectors within the SEC and between the SEC and the United States Commission for Commodity Futures Trading (CFTC).

Currency financing remains a priority

In addition to the CLARITY Bill, Peirce has placed a priority on token financing. She indicated that the SEC had advanced its preparations and hoped that an enforceable set of rules would be developed so that tokens could be used for financing activities.

At the same time, she mentioned that the “innovation exemptions” discussed within the Working Group also wished to make progress before leaving. Such arrangements are usually seen as providing a clearer pilot space for new encryption products and business models.

Definition of trustee and broker to be clarified

Peirce also listed a number of infrastructure-level issues, including how transfer agents can access block chain systems, how investment advisers and brokers can host encrypted assets, and the location of clearing agencies in the digital asset market.

She mentioned that DTCC, the United States Management Trust and Settlements Corporation, had recently obtained a letter of no enforcement action that could be tested in related areas. At the same time, the SEC is revisiting the scope of application of the definition of “broker” in the encrypted market, including whether the user interface will be regulated.

Term expires at the end of the year

Peirce disclosed that her term of office had expired last June. If she does not have a replacement, she will be able to remain until the end of the year. She expected that most of the above work would not necessarily be complete before she left, but believed that the regulatory advance of the SEC on digital assets would not be interrupted.