A New Era of Regulatory Framework: Paving the Way for the Encryption Asset Market

At a recent tokenization roundtable, an important figure shared insights on the trend of migrating securities from traditional systems to blockchain systems. This shift was likened to the evolution of audio recordings from vinyl records to digital formats, signaling a potential comprehensive transformation in the securities market.

Blockchain technology has brought new possibilities for securities, such as using smart contracts for dividend distribution and converting low-liquidity assets into high-liquidity investment opportunities. These innovations may give rise to new types of market activities that existing regulations do not yet cover.

In order for the United States to maintain its leading position in the global encryption field, regulators need to keep up with the times and consider adjusting existing rules to accommodate on-chain assets. Outdated rules may hinder the development of blockchain technology.

Establishing a reasonable regulatory framework is an important task at present, which includes formulating clear rules for the issuance, custody, and trading of encryption assets, while combating illegal activities. Clear rules can not only protect investors but also help them identify illegal activities.

Future policy-making will no longer rely on temporary enforcement actions, but rather guide market participants through the establishment of practical standards. The focus of enforcement will return to combating fraud and manipulation.

In terms of encryption asset policy, the main focus is on three areas: issuance, custody, and trading.

In terms of issuance, currently only a few institutions have registered for issuance, primarily because the existing disclosure requirements are difficult to meet. In the future, consideration will be given to adjusting the registration forms to better suit the characteristics of encryption assets, and new registration exemptions and safe harbor provisions may be introduced.

In terms of custody, registrants will be given more autonomy to decide how to custody encryption assets. It may be necessary to clarify which types of custodians meet the qualifications set by relevant laws and consider allowing self-custody in certain cases.

In terms of trading, it will support registrants in providing a wider variety of products and services on their platform. This may include allowing brokerage firms to offer integrated trading of securities and non-securities through a "super app". At the same time, it will explore how to facilitate the listing and trading of encryption assets on national stock exchanges.

Overall, regulators are working to develop a comprehensive encryption asset regulatory framework to ensure that the United States becomes the most suitable place in the world to participate in the encryption asset market. This requires coordinated cooperation with various aspects of the government and Congress to achieve this goal.