A focus on surveillance, best execution, and deeper liquidity is indicated by the regulatory path.
A rulemaking agenda that shifts U.S. crypto oversight toward formal rules has been set by the Securities and Exchange Commission (SEC), outlining proposals on the offering and sale of digital assets, the treatment of broker-dealers, and the potential for crypto trading on national exchanges and alternative trading systems.
The simplification of disclosures and a reduction in compliance burdens tied to shareholder proposals are also included in the agenda, which frames the pivot as part of a broader modernization of capital markets policy.
The agenda is being presented alongside increased cooperation with the Commodity Futures Trading Commission.
On Sept. 2, a joint initiative to issue guidance for the listing of leveraged, margined, or financed spot retail commodity transactions in digital assets was announced by the agencies. This move addresses friction around how and where retail spot activity is overseen, as the coordination signals intent to narrow jurisdictional gaps that have complicated market structure questions for years.
The SEC’s regulatory track has already impacted crypto market infrastructure, especially exchange-traded products. On July 29, in-kind creations and redemptions for crypto ETP shares were permitted by the Commission, bringing Bitcoin and Ether products into alignment with the mechanics used by other commodity-based ETPs and easing a source of friction for authorized participants.
SEC Introduces In-Kind Processes to Improve ETF Spreads and Operational Efficiency
According to the SEC’s press release, it was stated that in-kind processes now supplement prior cash-only mechanics, which had been a limitation on spreads and operational efficiency.
The enforcement backdrop has shifted. Earlier this year, the ongoing work of an internal crypto task force was cited by the SEC when it moved to dismiss its civil lawsuit against Coinbase through a joint stipulation.
According to the agency’s press release, the dismissal followed the creation of a unit focused on establishing a comprehensive framework. This move came after two years of litigation that centered on whether several traded assets were unregistered securities.
In May, the case against Binance entities and founder Changpeng Zhao was also dismissed, with prejudice, by the Commission, ending one of the most high-profile matters from the prior policy cycle.
Collectively, the agenda, the joint SEC-CFTC effort, and the ETP changes suggest a direction that lessens venue and product uncertainty, even while final regulations are pending. If crypto is permitted to trade on national exchanges and ATSs, liquidity would be moved to environments governed by exchange oversight programs, best-execution duties, and market-data systems.
According to Reuters, exemptions or safe harbors for certain offers and sales are also being considered by the Commission. The concept, which has antecedents in prior staff statements, is now positioned for notice-and-comment rulemaking. This guidance, if it provides sufficient detail on custody and net capital handling, would define how intermediaries manage crypto alongside other securities.
Public companies with digital asset exposure and ETP sponsors could be affected by changes to disclosures. A streamlining of disclosures may strengthen the link between risk factors and actual operational exposures, and a lighter burden for shareholder proposals might influence how crypto policy issues emerge during the proxy season.
Tighter spreads and more resilient primary-market flows in periods of stress are supported, market participants argue, by the ETP in-kind decision. These outcomes typically accompany commodity ETPs that employ in-kind mechanics.
Significant questions persist. Comprehensive criteria for digital asset listings on exchanges are required, and the division of supervisory responsibility between the SEC and CFTC for spot activity will need to be explicitly detailed in binding text, not only in joint statements.
It has been stressed by the Commission that enforcement against fraud persists, so the shift to rulemaking does not function as amnesty. The process from agenda to final rules entails proposal releases, comment periods, and votes, which presents risks to timing and scope even as the direction is more evident than it was a year ago.
A model that uses established securities tools to govern digital assets without halting product development is indicated by the Commission’s framing, including statements by leadership concerning innovation, capital formation, and investor protection.
The basis of that transition is formed by the agenda, the coordination with the CFTC, the case dismissals, and the ETP decision. If the agency follows through with proposed rules that permit exchange and ATS trading, formalize exemptions for certain offers and sales, and resolve broker-dealer questions, the U.S. crypto market structure will look more like other regulated markets.
