Small business advocacy group recommends US congress ‘clarify the status of digital assets’

Small business advocacy group recommends US congress 'clarify the status of digital assets'

The U.S. Securities and Exchange Commission (or SEC) has provided a report to Congress that contains recommendations from small businesses looking for regulatory clarity on the role digital assets play.

The SEC’s Office of the Advocate for Small Business Capital Formation announced on Sept. 27, its findings from the 40th Annual Small Business Forum, which was held in May. The forum included all five SEC Commissioners, 14 SEC staff members, 11 small business advocates, 11 speakers and 610 participants from the U.S. Public. They recommended that the U.S. Congress clarify the status of digital assets in order to clearly define when they are security.

The Small Business Forum’s recommendation did not include any additional information about the reasons for the request to amend the regulatory framework regarding digital assets. The SEC responded to clarify that the current standard for determining whether cryptocurrency like Bitcoin (BTC), qualifies as “investment contract” and therefore securities, is the Howey Test. The Commission also cited the 2019 framework by FinHub (Strategic Hub for Innovation and Financial Technology), “analyzing whether a cryptocurrency is an investment contract and whether sales and offers of a crypto asset are securities transactions.”

The SEC stated that market participants who want to know if a digital asset is security should seek advice from securities counsel and consult with FinHub staff.

Related: Finance Redefined: Layer two growth and the SEC’s scrutiny Sept. 19-23

This tagline is familiar to the Commission. Gary Gensler, the SEC chair, has repeatedly called for cryptocurrency projects and platforms to “come in to talk” with the agency instead of waiting for enforcement action. Cointelegraph reported that in August, the SEC chair wanted to make crypto-related policy changes around stablecoins and token offerings, custody, exchange traded funds, lending platforms, and decentralized finance.

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