Protocols & Policy · Regulation
NASAA's Oct. 20 comment letter says the SEC's proposed Regulation Crypto Assets lacks investor protections and exceeds the agency's power to override state law.
State securities regulators have asked the SEC to withdraw a proposed rule that would let crypto issuers raise up to $5 million over four years without registering. In an Oct. 20 letter, the North American Securities Administrators Association (NASAA) argues the rule would leave retail investors without basic protections [1].
The proposal, Regulation Crypto Assets (File No. S7-2026-27, 91 FR 54510), would create two exemptions from SEC registration for certain investment contracts involving crypto assets. It would also add a safe harbor, a set of conditions under which a crypto asset would be deemed not to be subject to an investment contract, and so not a security under those laws. Comments closed Oct. 20 [2].
NASAA's letter, signed by its president, Elizabeth H. Bowling, says the proposal "lacks the robust investor protections necessary for the types of offerings, and offerees, contemplated under its exemptions." It says the rule "should be withdrawn because it is bad policy that would endanger investors, harm other registrants, and weaken the securities markets generally" [1].
Its specific objections:
NASAA also offers fallback fixes in case the rule is not withdrawn, such as replacing the proposal's principles-based disclosures with existing prescriptive disclosure requirements [1].
The rule remains a proposal. The next step is whether the Commission adopts a final rule, changes it, or withdraws it, as NASAA asks.
Holding the Corner.
Not financial advice.