SEC Commissioner Uyeda Calls for Reform in Crypto Disclosure Rules, Criticizes Current Approach
Summary:
SEC Commissioner Mark Uyeda voiced criticism over the agency's methods of crypto disclosure rules, describing them as "problematic". Asserting that the current approach hampers capital formation and fails to protect investors, he called for an updated Form S-1 filing to better reflect the uniqueness of digital assets. This disclosure file is employed by firms for public offerings and new securities registration. His statement comes in the wake of multiple suits launched by the SEC against Ethereum development firm Consensys and its wallet application, MetaMask, alleging unauthorized securities offerings. Uyeda's criticism was welcomed by industry insiders voicing the need for a tailored disclosure regime for crypto assets.
Mark Uyeda, a Commissioner at the Securities and Exchange Commission (SEC), has criticized the stringent approach implemented by the statutory body in relation to cybersecurity disclosure laws, highlighting its application to cryptocurrency asset filings as "troublesome". On 1st July, via an official statement on the SEC's website, Uyeda acknowledged new rules and altered forms that will enforce the Registered Index-Linked Annuities (RILA) Act, modifying certain prerequisites for certain companies to file their Form N-4 requests. Though ostensibly unrelated to cryptocurrency, the SEC official subtly indicted the Gensler-led commission's cryptocurrency regulation tactics, more so the disclosure of information in Form S-1 filings, within the footnotes of the statement.
In footnote 3, Udeya suggested updates to the Form-S1 filings - which companies use for public offerings or to register new securities - to aptly represent the unique attributes of digital assets and denounced the statutory body's current processing of crypto applications as "troublesome". "The Form S-1 could unnecessarily demand information that doesn't apply or is irrelevant for issuers and cryptocurrency assets, but yet neglect to ask for certain relevant information", Udeya noted. He added that the existing approach toward cryptocurrency assets was problematic as it neither supported the generation of capital nor safeguarded investors.
Alexander Grieve, the Head of Government Affairs at crypto venture capital firm Paradigm, expressed his thoughts regarding this issue in a post on July 2nd, stating, to his understanding, this was Udeya's first recorded call for crypto assets to have a specific disclosure regime. The Blockchain Association, a crypto advocacy group based in the U.S., lauded Udeya's comments in a July 2nd post, extolling his "nuanced, forward-thinking approach" to cryptocurrency as precisely what the field required.
Udeya's comment followed his commission's lawsuit against Ethereum development firm Consensys on June 28th. The SEC accused Consensys' wallet application, MetaMask, of being an unauthorized broker involved in the "offer and sale of securities" and targeted Ethereum staking services like Lido DAO and Rocket Pool, platforms MetaMask employs for Ether (ETH) staking. The development firm responded to the lawsuit in April after receiving a Wells notice from the SEC, scrutinizing potential attempts to characterize ETH and related staking services as securities.
Published At
7/2/2024 9:04:06 AM
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