Crypto Task Force Collaborates with Blockchain Association on Custody Regulations

SEC Crypto Task Force Meeting

• Discussion on Custody Rules: The SEC's Crypto Task Force convened with representatives from the crypto industry, including the Blockchain Association and Multicoin Capital, to address regulatory challenges, particularly focusing on custody rules for investment advisers managing digital assets. The Blockchain Association highlighted that existing custody regulations, designed for traditional securities, are impractical for digital assets.

• Call for Alternative Framework: Participants advocated for a new regulatory framework that would enable investment advisers to manage cryptocurrencies without the compliance hurdles that are not present in traditional finance. Key figures included Blockchain Association CEO Summer Mersinger and legal experts from Multicoin Capital and Blockchain Capital.

Kraken's Tokenization Proposal

• Presentation of Tokenized Trading System: In a subsequent meeting, Kraken presented a comprehensive plan for a tokenized trading system, detailing how tokenized transactions would transition from execution to settlement. This proposal was supported by legal counsel from WilmerHale.

• Benefits of Tokenization: Kraken's executives argued that implementing tokenization could enhance the efficiency of capital markets, reduce costs, and broaden access for a diverse range of investors. However, the SEC faces the challenge of fostering innovation while ensuring investor protection.

Regulatory Challenges Ahead

• Balancing Innovation and Regulation: Both meetings underscored the difficulties U.S. regulators face in modernizing rules that were originally designed for traditional markets. The outcomes of these discussions are expected to significantly influence the integration of digital assets into the U.S. financial system.