SEC Removes Definition Of “Digital Asset” In Latest Hedge Fund Rules
- The U.S. Securities and Exchange Commission has removed the first official definition of “digital asset” in its latest household hedge withdrawal rules.
- The Commission and staff continue to review the term and do not apply digital assets as part of this rule.
- This week’s hedge withdrawal rule’s initial definition for a digital asset was not expansive or controversial.
In removing the first official definition of “digital assets” from hedge fund rules, most recently on Wednesday, the U.S. Securities and Exchange Commission (SEC) took a small step back in its efforts. The force that regulates the cryptocurrency industry.
Although the SEC originally included this definition in its 2022 proposal. Mandatory disclosure reform for household rooms, in the final rule approved by the commissioners, the regulator The censorship securities regulator has eliminated this definition.
“The committee and staff are continuing to review the term and do not apply ‘digital assets’ as part of this rule at this time,”The note stated.
Despite the decision to withdraw this decision, the agency is undoubtedly still looking into crypto issues as they have a significant impact on both their ongoing enforcement actions and regulatory proposals. Last month, the regulator effectively reversed course by revisiting a previously proposed rule that would clearly redefine the term “exchange” and include decentralized finance (DeFi).
The industry and two of the five SEC commissioners harshly criticized that amendment, which is among a number of recent policy changes that aim to incorporate cryptocurrencies into existing regulations explicitly. Another proposal from the SEC in February could ban financial advisors from maintaining assets in crypto businesses.
The original definition proposed for a digital asset in this week’s hedge fund rules did not expand or cause controversy, describing something like “using distributed ledgers or blockchain technology.” and includes “so-called ‘virtual currencies,’ ‘coins’ and ‘tokens.'”
But a lobbying organization for the industry, the Securities Industry and Financial Markets Association objected to the definition’s wording, saying that it “captures non-security digital asset classes, including commodities, bitcoin, and non-fungible tokens, but it is unclear whether the definition intended to capture any digital assets as opposed to all securities.” Sifma had therefore requested that the definition be more precise.
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