The U.S. Securities and Exchange Commission (SEC) on Monday announced the appointment of Valerie Szczepanik as Associate Director of the Division of Corporation Finance and Senior Adviser for Digital Assets and Innovation. Szczepanik’s real title should be Cryptocurrency Chief.
In the newly created position, Szczepanik is responsible for overseeing the application of U.S. securities laws “to emerging digital asset technologies and innovations, include Initial Coin Offerings and cryptocurrencies.”
In March, the SEC issued a ruling that online platforms offering trading of digital assets that meet the federal definition of a security must register with the SEC as a national securities exchange or be exempt from registration—that is, available only to sophisticated buyers.
The U.S. Commodities Futures Trading Commission (CFTC) has ruled that cryptocurrencies are commodities and will be regulated by the CFTC. If digital currencies are commodities, then they will be regulated by the CFTC and investors will not receive any protection from U.S. securities laws enforced by the SEC
The SEC and the CFTC are currently considering whether Ethereum is offering a security or a commodity. The answer will depend on whether the creators of Ethereum or other digital currencies (bitcoin excepted) have undue influence over the value of those digital assets. The discussion is more technical and complicated than it might first seem.
Szczepanik’s job is to sort all this out. SEC division director Bill Hinman, Szczepanik’s new boss, said:
Valerie recognized early on the securities law implications of developments like blockchain and distributed ledger technologies, and of cryptocurrencies, Initial Coin Offerings, tokenized securities, and other digital instruments. She is a recognized leader in responding to developments in our markets.
Cryptocurrency exchanges and investors do not want digital assets to be regulated as securities, preferring instead the more loosely defined commodity designation, if there has to be regulation at all.