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The Securities and Exchange Commission, or SEC, may soon issue new rules for the regulation and registration of securities swaps, including cryptocurrency.
In a speech to the American Bar Association’s Derivatives and Futures Law Committee, SEC Chairman Gary Gensler outlined upcoming changes to securities-based swaps over the next year. The changes are designed to increase transparency and reduce risk to the market. The new requirements that will come into effect in November include new counterparty protections, capital and margin requirements, internal risk management, oversight and chief compliance officer, trade recognition and confirmation, as well as as well as record keeping and reporting procedures. From next February, for example, exchange data repositories will have to publicly disclose data on individual transactions.
Gensler clarified:
“So I asked staff to consider ways to continue to increase transparency and reduce risk through our unused permissions, especially with regard to security-based FLS and position reporting. “
Towards the end of his speech, Gensler said the transaction reporting rules would apply to cryptocurrencies if the products are security-based swaps:
“Make no mistake, it doesn’t matter if it’s a stock token, a value-backed stable token, or some other virtual product that offers synthetic exposure to the underlying securities. These platforms, whether in the decentralized or centralized financial space, are implicated by securities laws and must operate within the framework of our securities regime. “
Related: Is It Time For The United States To Create A “Practice Test” For Crypto?
Any offer or sale to individuals must be registered under the Securities Act of 1933. Gensler said the SEC would use any tools at its disposal to ensure investors are protected in these cases.
Cryptocurrency regulations have been a major topic of discussion among a number of U.S. government agencies in recent months. The Federal Reserve Chairman took a hard line on the need for tighter regulations for stablecoins on July 14, before discussing the possibility of a digital U.S. dollar in Congress last week. A bill has also been introduced in Congress that aims to provide a greater legal definition of digital assets and reduce fear of future regulations regarding blockchain-based tokens. On Monday, a meeting on stablecoin regulation of the President’s Financial Markets Task Force announced that they plan to issue recommendations for such regulations in the coming months.
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