SEC Receives New Crypto Submissions on Self-Custody and DeFi Rules

SEC Crypto Task Force receives submissions addressing self-custody rights and DeFi rules in tokenized markets.

The US Securities and Exchange Commission updated its Crypto Task Force “Written Input” page on Tuesday. Two new submissions concentrate on self-custody rights and proprietary trading regulation over tokenized and DeFi markets. Stakeholders want to impact federal guidance and guarantee the protection of investors and market stability.

Industry Calls for Respecting Self-Custody Rights and Innovation Exemptions

One of these submissions, written by “DK Willard highlights Louisiana retail users and HB 488 legislation. It contends that federal regulations ought to honor self-custody rights and enforce tough anti-fraud measures. Thus, protections at the state-level should not be obsolete in the context of a federal regulatory review.

A second input on tokenized markets dealer rules was provided by the Blockchain Association Trading Firm Working Group. They claim that companies that trade DeFi assets on their behalf are not necessarily dealers.

Related Reading: Crypto News: SEC Chair Backs Fast Approval of Crypto Market Bill

Cryptocurrency regulators in the industry and government consultants are urging compromise to progress. Senior White House crypto adviser Patrick Witt emphasized the need to balance regulation and market innovation. He emphasized that compromise is necessary as long as the Congress is dominated by Republicans.

In Davos on Wednesday, Coinbase CEO Brian Armstrong said that CLARITY was making progress. He pointed out that collaboration between regulators and industry would provide a win-win situation. Armstrong further noted that collaboration is necessary to safeguard the American investors.

The submissions indicate continued consultation between the industry, state legislators, and federal officials. They suggest that self-custody protections and DeFi trading innovations are still defining US policy structures. Furthermore, the two inputs emphasize transparency to avoid unintentional limitations to market participants.

Industry Pushes for Clarity on DeFi and Tokenized Equity Rules

The new inputs are yet to be publicly commented on by SEC officials, and this has generated anticipation in the market. According to analysts, submissions may affect the way the agency structures guidance on DeFi trading and self-custody protections. The initial response shows that stakeholders are keen to influence regulation.

These contributions also demonstrate coordination of the priorities of legislative processes between advocacy groups and private firms. The Blockchain Association highlights that liquidity providers need exemptions to work effectively. Therefore, regulations should strike a balance between innovation and investor safeguards to maintain confidence.

Patrick Witt also indicated that legislators are seeking to tackle the yield of stablecoins, DeFi liquidity, and investor safeguards at once. He stressed regulatory clarity would facilitate safer markets and responsible growth. Involvement of industry is also essential to make rules possible and enforceable.

Overall, the submissions indicate a constant attempt to streamline crypto regulations in a comprehensive manner. In new directions, they emphasize the ability to balance state rights, federal control, and market innovation. As a result, SEC analysis will emphasize protection of investors, market efficiency, and transparency to all market members.

The rules can have an impact on larger US and global crypto regulation debates, should they be instituted. Stakeholders will require some guidance that will offer a clear direction regarding DeFi trading, tokenized equities, and self-custody rights.

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