CLARITY Stalled. Inside the SEC's Plan for Onchain Markets

Taylor Lindman (0:00)

So much of this, I really think, is within our existing authority, it has been things that have been underway for a long time. Clarity would have supercharged some of that, but it also allows us, without clarity, to take the path that was kind of laid out based on our existing authorities. And that's what you're seeing now.

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Rebecca Rettig (1:09)

Welcome to The Policy Protocol, your weekly espresso shot of the latest in FinTech law and policy. Not just what happened, but distilled down to what actually matters. I'm Rebecca Rettig and I'm here with my co-host Renato Mariotti. How are you, Renato?

Renato Mariotti (1:21)

I'm doing well. Better than to be expected after some of the events of last week.

Rebecca Rettig (1:26)

Yeah. We were off last week. There was a lot that went on. We will now get to do the postmortem, having seen all the postmortems, so I think there's a lot to talk about. Let's kick off a little bit and talk about what can only, there's only one hot topic of the week with lots of hot topics that come along with it. But Renato, why don't you kick us off?

Renato Mariotti (1:46)

Yeah. Look, clarity stalled in the Senate last week.

Obviously, it's not dead technically. It could come back, although I'm told that that is highly unlikely and that even a skinny version is unlikely to get resurrected in the lame duck session. And so that is disappointing. I think some of that was, as I had mentioned, ethics was such a focus before. I think if that last minute proposal regarding ethics had come maybe in May or June or something like that, it would have been possible. But just a few days before the culture vote, that was very difficult.

Rebecca Rettig (2:26)

Yeah, I talked to the FT right afterwards. And what I said was, because the political environment right now is so charged and we're so close to the midterms, accepting anything on ethics that seemed anything less than like a 100 percent win. Not we compromised and we got there. But I think the Dems wanted a 100 percent complete and total win.

You know, just because of the environment we're in right now. And the other thing I'll say though is like, you know, we've seen a lot going on in the government and I will say, giving anything on ethics and having this type of provision is pretty unheard of. And so I think that's been overlooked too, which is like, we didn't get everything we wanted on ethics. But to even have an ethics provision, I think was a pretty big deal. So, you know, we have to recognize that as well.

Renato Mariotti (3:12)

Well, look, I, you know, I think to moving forward, I think that, you know, we have to move forward as an industry. I think it's a bad thing for the United States of America that we do not have a bipartisan piece of crypto market structure legislation. That's unfortunate. But I think, you know, we do have a lot that is rolling out from the commissions. The SEC has already started the party, so to speak. The CFTC, I think, is on its heels. There's something that's in the White House for consideration right now. So, a lot's happening and that's exciting. Now, I will say, you know, a statute is extremely hard to undo. Of course, it's extremely hard to get in the first place, as we've discovered.

A final rule takes a future commission, maybe a couple of years to reverse. But an order, like we saw an exemptive order, you know, can be changed by a vote. I think the SEC's new order says that on its face. So, a staff letter can disappear the day a new administration comes in. I think there's going to be a lot of questions from folks in the industry about what to rely on and how to build. And I think that is the important conversation for everybody in the industry now.