Reshaping Regulatory Landscape for Digital Assets
In a bid to reshape the regulatory landscape for digital asset transactions, companies rooted in cryptocurrency are intensifying their lobbying efforts with the U.S. Securities and Exchange Commission (SEC). Recently, Fairmint, a firm specializing in transfer agent services, submitted an innovative proposal to the SEC’s Crypto Task Force aimed at addressing the issues associated with the private securities market, notably its outdated and disjointed back-end systems.
Core Components of Fairmint’s Proposal
The proposal was presented to SEC Chairman Paul Atkins and Commissioner Hester Peirce and comprises seven core components. Aiming for a harmonization of operational standards among transfer agents, Fairmint’s plan emphasizes the need for real-time regulatory oversight facilitated by blockchain technology. It advocates for allowing investors to self-custody their assets while ensuring robust compliance measures are in place.
Notably, it also proposes moving towards knowledge-based accreditation standards, stepping away from conventional metrics like income and net worth, and encourages the creation of a regulated sandbox for decentralized finance (DeFi).
Current Challenges in Private Equity
According to Fairmint CEO Joris Delanoue, the current private equity sector primarily relies on costly spreadsheet software for managing significant financial records, lacking the sophisticated settlement capabilities found in public markets. Fairmint serves various clients, including Privy, a wallet infrastructure provider, and Bloom Network, a platform for place-based social media.
“Private companies are managing billion-dollar cap tables in Excel while public companies have regulated infrastructure,” Delanoue stated, highlighting the inefficiencies and compliance challenges faced by private firms.
SEC’s Efforts and Industry Response
This push for reform comes as the SEC’s Crypto Task Force is actively seeking input on how to navigate regulatory frameworks that mesh traditional finance with digital assets. Recently, the SEC hosted two significant roundtables discussing topics such as tokenization and decentralized finance, receiving insights from industry leaders.
Financial institutions are also showing interest in tokenizing publicly listed businesses, with Robinhood, a popular retail trading platform, announcing plans to develop a blockchain network aimed at facilitating trading of U.S. stocks for European users. CEO Vladimir Tenev has indicated that the tokenization of private equity is poised to become a major focus for the company moving forward.
