Digital Asset Securities Working Group

The Financial Information Forum (FIF) working group on Digital Asset Securities aims to identify and address regulatory issues hindering the broader adoption of digital asset securities in the U.S. The Securities and Exchange Commission (SEC) currently relies on existing regulatory frameworks to allow broker-dealers and alternative trading systems (ATS) to issue and support the trading of digital asset securities. However, these frameworks require more explicit rules to address the unique characteristics of digital asset securities to allow a broader range of firms in the industry to participate.

Digital Asset: A digital asset is any asset issued and transferred using distributed ledger or blockchain technology.

The working group focuses on addressing shortfalls in the following areas:

  • Customer Protection Rule: Expand custody options for digital assets.
  • Regulation SHO: Extend existing rules to digital asset securities.
  • Regulation ATS: Develop new rules for digital asset securities trading systems.
  • Fair Access Rule: Improve access to digital markets, as the current 5% volume threshold is inadequate given that these ATSs can account for 100% of the volume for the securities they trade.
  • Securities Act of 1933: Update to address blockchain networks that operate without a central entity.
  • Three & Four Step Process: Modify to facilitate broader adoption and access to ATSs.
  • Blockchain Tokenization: Implement necessary regulations.
  • Custody of Digital Assets by Broker-Dealers (SEC Rule 15c3-3): Address specific custody requirements.
  • Publications of Quotations (SEC Rule 15c2-11): Adapt rules for cryptocurrencies, which cannot comply with 15c2-11 due to the absence of a central entity.
  • Licensing Process: Enable firms to obtain the necessary and appropriate licenses to engage in digital asset trading activity.

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