New Administration Outlook: SEC Announces Creation of Crypto Task Force
On January 21, 2025, Acting SEC Chairman Mark Uyeda announced the creation of a crypto Task Force dedicated to developing a "comprehensive and clear regulatory framework for crypto assets." Acting Chairman Uyeda tasked Commissioner Hester Peirce with leading the group, which will be composed of staff from across the agency.
According to the SEC's press release, "the Task Force will collaborate with Commission staff and the public to set the SEC on a sensible regulatory path that respects the bounds of the law." The creation of the Task Force emphasizes Acting Chairman Uyeda's move away from the policy of so-called "regulation by enforcement" and toward his stated aims of providing clarity and opportunity for crypto-related entities looking to register with the SEC. For her part, Commissioner Peirce is noted for her desire for clarity around jurisdiction, the encouragement of innovation without compromising consumer protections, and a willingness to solicit perspectives from those in the industry and in the community.
The Task Force is instructed to operate within the existing statutory framework provided by Congress and to provide assistance to Congress in making changes to that framework. In doing so, the Task Force is expected to coordinate its efforts with other government agencies, namely the CFTC.
With the ambitious schedule set forth in the recent executive order issued by President Trump appointing a crypto Working Group, as previously discussed in our previous post, the SEC and CFTC will need to collaborate closely to develop a suitable and responsible crypto regulatory framework. However, indications of likely next steps can be gleaned from the opinion piece Commissioner Peirce and Acting CFTC Chairman Caroline Pham previously issued in 2022. There, Peirce and Pham indicated their interest in interagency cooperation and in the creation of "a joint set of public roundtables to evaluate recent market events and risks, and to discuss how to regulate crypto responsibly."
Acting Chairman Pham went on to lay out her proposed plans on crypto regulation in further detail in 2023, when she proposed a CFTC pilot program for the digital asset markets "to test, gather data, and develop a pragmatic approach to digital assets and tokenization [to] ensure we continue to uphold our mandate of fostering open, transparent, competitive, and financially sound markets." As an initial step, Pham again called for a roundtable to engage all stakeholders, similar to the round tables she and Commissioner Peirce previously endorsed, and then the CFTC should propose and adopt rules establishing a pilot program that incorporates components from past pilot programs. "This undertaking will take time, patience, and much hard work. It will succeed only if the Task Force has input from a wide range of investors, industry participants, academics, and other interested parties."
In her comments, Acting Chairman Pham described three prior pilot programs that the CFTC and SEC separately launched: a CFTC three-year pilot to permit a new class of transactions to trade; a CFTC three-year pilot to permit the purchase and sale of agricultural trade options on certain commodities; and the SEC's circuit breaker program after the May 6, 2010, Flash Crash. The CFTC pilot programs were composed of rules providing a framework for safeguards, reporting requirements to the CFTC, registration requirements with the granting of temporary licenses or registrations, risk disclosure requirements regarding the transactions at issue, as well as financial requirements and contractual conditions. The SEC's circuit breaker program also had a pilot period where adjustments to the circuit breakers were made when needed and to expand the scope of securities subject to the circuit breakers when practicable.
Acting Chairman Pham advocated for a pilot program that incorporates many of the components from these prior pilot programs and envisioned a crypto pilot program that would include registration and eligibility requirements, financial resources and other conditions, risk management, products and contract terms, and other requirements including disclosures as well. At the conclusion of the pilot program, consideration would be given to whether a permanent change to the CFTC's rules should be made.
Given those previous statements, it seems likely that public roundtables will be a natural starting point for the Task Force, giving stakeholders the opportunity to comment on and shape crypto policies going forward, with regulatory sandboxes created based on prior pilot programs providing further guidance in shaping a clear regulatory framework for crypto.