SEC Commissioners to Appear Before the US House Financial Services Committee to Talk Crypto
The United States House of Representatives Committee on Financial Services, chaired by Maxine Waters, set a hearing for the Securities Exchange Commission (SEC) on Tuesday next week. The one-panel hearing is set to discuss a number of financial decisions by the commission including cryptocurrencies, public vs private markets, public disclosure, enforcement by the commission and
Five commissioners from the SEC are expected to appear before the panel including the chairperson, Jay Clayton and “Crypto Mom”, Hester M. Peirce – who is expected to answer on the crypto related regulations the securities’ commission is setting up.
SEC Appearing Before the House Financial Service Committee
In the memo titled,
“Oversight of the Securities and Exchange Commission: Wall Street’s Cop on the Beat”,
the Financial services committee gave an overview of the key points of discussion on crypto regulation. The report claims digital assets which pass the
“Howey Test” (guidance by the SEC on what an investment contract entails) should be classified as securities and “must either register with the SEC or meet an exemption”.
Following the withdrawal of the Bitcoin ETF proposal by VanEck/SolidX from the SEC, the memo explained ETFs as an investment company hence it should follow the stipulated regulations. The report reads,
“If an asset is an investment company and not exempt from registration, it must comply with regulations designed to minimize conflicts of interest, including regular disclosure of their financial condition and investment policies to investors.”
‘Libra can be Classified as a Security’
Both the SEC and the Financial services commission are looking closely on Facebook’s crypto, Libra’s development. Since the announcement of Libra in April this year, created by 27 associating partner companies, regulators across the world are looking for the best regulatory practices for the token.
According to the Financial service committee memo, Libra may amount to being a security. The report reads,
The Libra Investment Token could amount to a security since it is intended to be sold to investors to fund startup costs and would provide them with dividends.”
Facebook has no plans to be paying Libra holders dividends which exempts the crypto from being a security. It is the interest from the assets in the Libra Reserve that will be used to pay dividends and fund operating costs.
“However, the offer of Libra could be integrated into the offering of the Libra Investment Token, thereby deeming both securities.”
– House of Representatives, Financial services committee on Libra as a security.