SEC settlement with BlockFi may be the biggest development in crypto regulation yet.
💖 Today’s Valentine's gift from U.S. Securities and Exchange Commission to the #crypto industry may be the biggest development in crypto #regulation yet.
💵 The $100m monetary settlement is irrelevant. Let's look at what the agreement actually means for the future of crypto #securities regulation.
✒ Without admitting fault (yada yada), BlockFi has agreed to:
1. attempt to bring its business within the provisions of the Investment Company Act within 60 days
2. register under the Securities Act of 1933 the offer and sale of a new lending product
☞ Per the SEC, "today’s settlement makes clear that crypto markets must comply with time-tested securities laws, such as the Securities Act of 1933 and the Investment Company Act of 1940".
🥀 This suggests that the US crypto regulatory framework will be largely built around existing rules (similar to what we saw in the EU's #MiCA proposed regulation), rather than a bespoke framework for #cryptoassets.
⚠️ So what does this mean? Well, if BlockFi's interest-bearing product is a security and must register as such, then similar crypto products are also securities.
🏦 This means the exchanges and other trading venues on which they are offered will need to register under the Exchange Act, or, more likely, as Alternative Trading Systems (#ATS).
🚀 Overall, this is a big step forward for the integration of #TradFi and crypto + #DeFi and gives firms clarity on the path forward.
If you would like to discuss the implications for your business, please DM me. Braithwate has extensive experience helping firms get licensed and develop pragmatic compliance programs.
Read the full SEC notice here.
