Petition Asks SEC to Clarify Rules on Bitcoin and Digital Assets

Petition Asks SEC to Clarify Rules on Bitcoin and Digital Token Assets

A petition has been filed with the U.S. Securities and Exchange Commission (SEC) for guidance and regulation for digital assets, including bitcoin. Ouisa Capital urges the SEC to clarify when digital assets which include digital currencies are considered securities and when registration requirements apply to companies facilitating their issuance and trading.

Also read: SEC Approves Petition to Review Bitcoin ETF Rejection

Petition for SEC’s Guidance

Petition Asks SEC to Clarify Rules on Bitcoin and Digital AssetsBlockchain technology company Ouisa Capital has filed a petition with the SEC regarding the “regulation of the digital assets and blockchain technology.” According to the petition, the company is registered with the SEC and with the Financial Industry Regulatory Authority (FINRA) as a broker-dealer and plans to use blockchain technology for its alternative trading system (ATS). The petition reads:

We encourage the SEC to publish a concept release on the regulation of the issuance and trading of digital assets to provide suitable guidance to the industry followed by the adoption of a new regulation on the same.

In particular, the petition asks the Commission to provide guidance on:

  • when digital assets are considered securities and
  • when digital asset-related companies must register as a broker-dealer, an ATS, or an exchange.

In addition, Ouisa proposes for the Commission to adopt a regulatory sandbox for digital assets, which some countries have already embraced including the United Kingdom and Singapore.

Already Treated Like Securities

Citing the similarities between digital assets and traditional assets, Ouisa believes that various applications of digital assets raise “the need for their regulation as securities.” This would apply to the issuance of digital tokens, the firm described, adding that:

Though the definition of security is very broad, it does not explicitly include digital currencies or other digital assets.

Petition Asks SEC to Clarify Rules on Bitcoin and Digital AssetsWhile the SEC has not provided guidance or adopted any rules regarding digital assets, it has evaluated them in the same was it does traditional assets, the petition notes. Moreover, the Commission has already “initiated a number of enforcement actions that provide a limited degree of regulatory guidance,” Ouisa wrote.

In these actions, digital assets were considered investment contracts, which are actually securities, the firm described. This means they “are subject to state and federal securities laws and must be registered or exempt from registration.” Furthermore, the firms that facilitate their issuance or trading “must register as a broker-dealer, an exchange, or an ATS,” Ouisa further detailed.

Enforcement Actions Where Bitcoin is a Security

Two cases where digital assets including bitcoin were considered securities by the SEC were noted in the petition. In the cases of “Trendon T. Shavers and Bitcoin Savings and Trust” and “In the Matter of Erik T. Voorhees,” the Commission stated that:

Investment schemes involving digital assets, specifically bitcoin, constitute the sale of securities and must be registered under the securities laws.

While the SEC stated that “it is clear that bitcoin can be used as money,” it did not address whether “bitcoins as units of digital currency constitute securities,” Ouisa added.

Voorhees is a famous early Bitcoin adopter and creator of both Satoshidice and Shapeshift. The agency found him to “have improperly raised bitcoins by means of an unregistered sale of shares in entities that he owned,” and concluded that:

Issuers selling securities to the public must comply with the registration provisions of the securities laws, including issuers who seek to raise funds using bitcoin.

These statements made by the Commission indicate that bitcoin and other digital assets are considered securities and platforms facilitating their issuance or trading must comply with traditional registration requirements. “It is also likely that peer-to-peer lending platforms that use digital assets may be required to register as broker-dealers or an ATS,” the petition notes.

Do you think the SEC will issue a guidance for bitcoin and digital assets soon? Let us know in the comments section below.

Images courtesy of Shutterstock, Ouisa Capital, and the SEC

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  • richmond plc

    i need contact information for adverts on this plantform thanks


    Quisa needs to mind their own business and let the people make its own financial decisions. Stop trying to control investors.

  • Mike Myers

    I think its a scary thought that the SEC is getting involved in something that was built decentralized by allowing regulations such as these we allow the same path to be followed that the current fiat crash is going down

    When the Few control the Production and Regulation of Money the Majority suffer

  • I think the SEC needs to f@ck off and stay out of crypto land

  • And Ouisa Capital needs to wank off too. Let the markets regulate themselves.

  • ChanceEGardner

    Here’s what the head of the SEC said in 2016 to Stanford grads:

    “Blockchain technology has the potential to modernize, simplify, or
    even potentially replace, current trading and clearing and settlement
    operations … We are closely monitoring the proliferation of this
    technology and already addressing it in certain contexts … One key
    regulatory issue is whether blockchain applications require registration
    under existing Commission regulatory regimes, such as those for
    transfer agents or clearing agencies. We are actively exploring these
    issues and their implications.”

    The SEC is aware and is actively taking bids for regulatory actions (just kidding).