SEC Backs Off. Is This the Big Unlock? #CryptoTownHall

**Scott Melker** (2:54)
Well, good morning, everyone. Welcome to Crypto Town Hall. Yesterday, we saw an announcement from the CFTC and SEC that effectively creates what they call token taxonomy, meaning that most of the major cryptos are not securities, and they laid out what would be a security, what would not be, when it's an investment contract, when it isn't. And the biggest issue that people in the industry are facing is will this be codified, could it be undone, and what will the rules be around all the various categories as we move forward. That said, it's a big deal. And of course, given the fact that we have an FOMC meeting today, and we have a war going on, the market doesn't seem to care, and we sell off. Is it a sell off on the news, et cetera, whatever it is. But there's a lot to talk about today, and it's one of those things that it's so logical, what they effectively have said, that it is very hard to both underestimate it. It's also very hard to say that this is what is absolutely necessary. So, you know, there's many takes. Most people are basically happy. You know, it ranges from the XRP Army saying, yeah, hey, you know, we told you, you know, Ethereum, et cetera. You know, there's no longer Ethereum special or Bitcoin special, et cetera, et cetera. But it is going to be one of those things that as things march forward, you will end up with a regime in the United States that will allow for crypto innovation. What form it takes is a different story. And we have a lot of people up here today. I don't have a particular concern. You know, we could talk about what the market's doing. We could talk about that. I don't see any any lawyers or any hands up here.
We're trying to see if I can get Meta Lawman to join us because I know he's been commenting about this sort of thing. But the truth is, is it will matter because investment like certainty and a lot of money that has been sidelined or left the United States to go to various places is, you know, could potentially come back, particularly given the, you know, what's going on in the Middle East and what's going on in the UAE right now. So it's an interesting time. William, what are your thoughts?

**William** (5:14)
Yeah, a quick read on the document on that document, and it is quite a complex document. It really requires careful reading.
What I took out of it is that it is somehow biased towards infrastructure, meaning that what they are saying is the safest tokens look like infrastructure. So most of the, if not all of the examples they gave were infrastructure tokens, and they are saying the riskiest ones look like a business. And they did give a pass to those that have already been out, as you know, but it doesn't mean that the road is clear going forward. It was a legal interpretation, basically. And you still have to do your homework. And what I'm a bit worried about is what's going to happen to experimentation. I was hoping that they would allow tokens to experiment a little bit more, maybe for one, two, three years, like a safe harbor. There was no safe harbor included in this particular note. So I wonder if that's going to come later. I would like to see more leniency towards experimentation beyond just infrastructure.

**Scott Melker** (6:43)
Well, yeah, I thought I saw another release or another headline that they were going to be putting in certain safe harbors. I mean, I think that there's a lot of work to be done. William, the safe harbor, you basically need the taxonomy first, and then depending on who has the authority, both the CFTC, which has effectively no regulatory infrastructure whatsoever for non-derivatives will need to create rules and a regime, and the SEC will need to, in all likelihood, either use safe harbors or no actions, but most likely rewrite a few of the rules that effectively make it very, very hard for securities, because one of the things they do want is, and Paul Atkins has said this repeatedly, is he wants to allow for tokenized securities, not just tokenization of stocks, but also tokens that provide value to investors to have a path to the market, and right now we all understand that there's a variety of reasons why being called a security is quoted death sentence. So that has to follow up.
The one thing that I'll say is, there's a lot of work to be done, and they have three years to do it, and then that's not easy. You may think that three years is a lot of time, but in SEC parlance, not really. It takes just the public comment period alone, once they've actually created a rule, can make a rule take two, three, four years to get implemented. So it's going to be difficult. Brian, let's see your hand up.