A coalition of 30 Crypto Advocacy Groups, led by the Crypto Council for Innovation, has encouraged the Securities and Exchange Commission to clarify the regulations for deploying and deploying services.
In response to the recent call from the SEC for public input about whether the expansion and the use of liquids should fall under the federal securities, the coalition has a joint letter Sketching why they believe that setting out should not be treated as a securities activity.
The letter, addressed to SEC commissioner Hester Peirce, comes in the midst of growing calls from the Crypto industry for the clarity of the regulations concerning the core blockchain infrastructure.
The group, coordinated by the proof of the Stake Alliance Council, that Coinbase, the Ethereum Foundation, Consensys and the Blockchain Association counts among its members, argued that setting out a “technical process” is that helps protect proof-of-stake networks, no investment scheme.
By supporting their position, the coalition said that setting does not meet the legal definition of an “investment contract” under the Howey test, the most important framework that the SEC uses to determine whether something is eligible as a security.
They argued that strikers do not invest money with an expectation of profit derived from the efforts of others. Instead, users retain fully owned by their tokens, which they can withdraw at any time, and any rewards are automatically determined by the blockchain protocol.
Moreover, the letter emphasized that setting providers is not responsible for generating profit, in contrast to traditional companies that depend on management decisions to generate returns. Instead, services act as intermediaries, where users are connected to blockchain networks where rewards are automatically determined by the protocol.
The coalition called on the SEC to issue principles-based guidelines for setting up and deploying services, similar to the earlier statements of the agency about proof-of-work mining.
Instead of implementing traditional securities laws, the group urged the regulator to recognize it as a technical function and to assume a framework that supports responsible use, including in products such as listed funds.
They also presented a series of practical standards for the preparation of providers, such as transparent disclosures regarding reimbursements and the lowering of risks, public audits of smart contract code, clear procedures for user votes and the use of accurate, non-promotional language.
“By offering clear, principles -based guidelines, the SEC would ensure that the US remains competitive in the fast -growing digital assets market,” said the group, adding that other jurisdictions such as the VK, Canada and Hong Kong have already taken steps to clarify their approach to sets.
They warned that without a similar clarity in the US, innovation could shift abroad, so that American companies and users can be left to a disadvantage.
The letter comes as various ETF emissioners, including Fidelity, Franklin Templeton, Vaneck and Grayscale, to include setting in their proposed place Crypto ETFs. However, the SEC still has to approve such proposals and recently delayed Decisions about various of these archives.
Nevertheless, analysts remain hopeful that approvals are on the horizon. Bloomberg’s Eric Balchunas and James Seyffart projected 75% to 90% approval opportunities at the end of 2025 for many pending crypto ETFs.
