The cryptocurrency industry is serving as a rare regulatory victory for the U.S. Securities and Exchange Commission’s latest liquid storage guide, which stakeholders say is an important step in diversified financing and institutional adoption of digital assets.
SEC staff announced Tuesday Posted a guide on liquid volumeunder certain conditions, liquids placed into the activity and the receipt token generated does not constitute a securities product.
Mara Schmiedt, CEO of blockchain developer Alluvial Company, told Cointelegraph that institutions can now confidently integrate LST into their products, which will surely drive new revenue streams, expand their customer base, and enable secondary markets to create secondary markets. ”
The decision lays the foundation for a wave of new products and services that will accelerate mainstream participation in the digital asset market. ”
Crypto companies have been seeking regulatory guidance for SEC liquid tokens. A group of Solana stakeholders on Thursday Write to the SEC Promote them to be included in the funds traded on the exchange.
Liquid discharge is the process of depositing crypto assets to a third-party provider and receiving a receipt token. These receipt tokens can be traded or used in Defi without waiting for demolition of funds.
“Today’s liquid stacking guide shows a nuanced understanding of LST technology, which we showed when we met with the topic in February,” Jito Labs CEO Lucas Bruder told Cointelegraph.
Despite the obvious support from the cryptocurrency industry, the SEC’s liquid discharge guidance has attracted criticism from within the agency. Commissioner Caroline Crenshaw Sharp objectionswarned that the statement relies on shaky assumptions with little regulatory certainty.
Related: What is liquid accumulation and how does it work?
Liquid under Howey tests into activity
“The SEC clearly shows that certain liquid placement activities do not involve securities and therefore registration is not required,” said Katherine Dowling, general counsel and chief compliance officer of BITWISE.
Whether an activity is eligible depends on the key elements of the Howey test, used to determine whether an asset or transaction constitutes a legal standard for the securities product.
For liquid storage providers, only “administrative or ministerial” functions, such as issuing tokens representing ownership of fixed assets, may not trigger securities registration requirements, the agency said.
This includes the person who issues a “deposit receipt token,” which is the way the liquid received by the crypto asset depositors deposit their cryptocurrency assets is stored.
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“In evaluating the economic reality of a transaction, testing is whether there is a capital investment in a common enterprise with reasonable expectations that are obtained from the entrepreneur or management efforts of others,” the SEC wrote.
The wave of institutional adoption may help retail traders and influence products that provide Defi services. “Retail platforms will be able to attract more users by providing seamless access to storage rewards without lockdown restrictions, while the wider ecosystem will benefit from increased liquidity and innovation,” Schmiedt said.
Magazine: SEC’s turnaround on cryptocurrencies leaves key issues
