U.S. Securities Laws Struggle to Adapt to Digital Assets, Experts Say

According to Cointelegraph, the rigidity of United States securities laws poses challenges for digital asset companies, as highlighted during a House Committee hearing on April 9. Rodrigo Seira, special counsel to Cooley LLP, emphasized the difficulties faced by crypto-native companies in aligning with the Securities and Exchange Commission (SEC). The hearing, titled 'American Innovation and the Future of Digital Assets: Aligning the U.S. Securities Laws for the Digital Age,' featured insights from Seira, WilmerHale partner Tiffany J. Smith, Polygon chief legal officer Jake Werrett, and Alexandra Thorn, a senior director at the Center for American Progress. Seira pointed out that the current securities regulatory framework is inadequate for regulating cryptocurrencies, failing to meet its policy objectives. He argued that the notion of crypto projects registering with the SEC is misleading, as evidenced by the lack of successful registrations. Despite acknowledging that crypto promoters raising capital should adhere to federal securities laws, Seira noted that few projects have managed to register their tokens under these laws without facing regulatory uncertainty. He explained that registration is not a straightforward process, as it requires operating as a publicly reporting company, similar to stock registration. Representative Bryan Steil, leading the Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence, addressed the hearing, recognizing the regulatory hurdles established by the previous administration. Under U.S. President Donald Trump, lawmakers are working to rectify these issues by introducing sensible legislation. The House Financial Services Committee recently advanced the STABLE Act, aimed at regulating payment stablecoins linked to the US dollar and other fiat currencies. Additionally, the Senate Banking Committee progressed the GENIUS Act, which seeks to regulate stablecoin issuers by setting reserve requirements and enforcing Anti-Money Laundering compliance. Steil highlighted the next phase of legislative efforts, focusing on comprehensive digital asset market structure legislation. Representative Ro Khanna expressed optimism at a digital asset conference last month, predicting that a market structure bill will be finalized this year. The goal of this legislation is to establish a clear regulatory framework for digital assets, defining their legal categories and the enforcement jurisdiction of agencies like the SEC and Commodity Futures Trading Commission.