Venture capital firm Andreessen Horowitz (A16Z) and advocacy agency Defi Education Fund have asked the U.S. Securities and Exchange Commission (SEC) to set up a safe harbor program for inappropriate tokens (NFT) and decentralized finance (DEFI) applications from agency broker-dealer registration requirements.
In a letter to the SEC Commissioner and the Crypto Task Force on Wednesday, Hester Peirce, Defi Group, of A16Z, Hester Peirce, said he was following up on the US President Donald Trump’s working group on digital assets. […]exchange […]and clearing agency […] Registration provisions under the Exchange Act. ”
In July, SEC Chairman Paul Atkins said he had directed agency staff to “update the rules and regulations of outdated institutions” regarding certain crypto and blockchain applications.
From an SEC regulations perspective, Safe Harbor would allow many companies that provide crypto-related products and services to avoid enforcement actions. The committee and individual investors have previously filed civil lawsuits against cryptocurrency companies to operate as unregistered dealers such as Cumberland DRW, Coinbase, and Kraken.
Related: SEC Commissioner says the “safe port” law has exacerbated the ICO problem
“The Safe Harbor Guidelines are that only apps that do not create risk designed to be addressed by the Exchange Act broker-dealer regulation regime, and in such cases, registration as a broker under the Exchange Act is unfair and inappropriate,” the SEC added.
“Safe Harbor provides much-needed regulatory clarity, maintains the authority of the committee to oversee high-risk activities, allowing developers to build in the US without fear of misuse of legal categories that are inappropriate for modern software infrastructure.”
The proposed changes to the SEC policy sent a letter to Peirce in March following the A16Z, detailing the agency’s NFT Safe Harbor recommendations. The company also said in another letter that the committee “can take the following measures” to set up a safe port for airdrops and network tokens.
Which companies will be affected by the “Safe Harbor” proposal?
In June, the SEC reported that approximately 3,340 broker-dealers with assets worth $6.4 trillion had been registered with the agency as of 2024. The authorities said “there is a trend towards industry integration and some of the market participants responsible for the larger asset pool are declining.”
The Committee established the Special Purpose Broker Dealer (SPBD) category in December 2020 for the custody of digital asset securities. However, the SEC revealed in May that SPBD designations are not essential for “broker dealers seeking to detain crypto assets of clients, which are securities,” adding that standard requirements apply to both digital assets and traditional securities.
How could the way digital assets be handled after the SEC and the Commodity Futures Trading Commission (CFTC) propose legislation proposed to establish crypto market structures? The major bill in the market structure, known as the Clarity Act, was passed by the House of Representatives in July and is awaiting consideration in the Senate.
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