AIMA Pushes for Principles-Based Crypto Oversight

In a letter to the Crypto Task Force established by the US Securities and Exchange Commission in response to its call for feedback, hedge fund association AIMA has called for a principles-based regulatory approach from the SEC towards crypto assets.

AIMA’s Digital Assets Working Group says that such an approach establishes regulatory clarity and legal certainty, by recognising that crypto assets encompass various asset types with distinct regulatory considerations. It also avoids a “one-size-fits-all approach that will allow regulators to tailor their responses to accommodate emerging technologies and products while maintaining investor protections.

Such an approach, AIMA argues, will encourage competitive market growth and support US businesses, developers, and other market participants in the US by fostering a pro-innovation, regulatory framework.

In terms of specific recommendations, AIMA argues that the SEC should withdraw the proposed Safeguarding Rule, as its requirements for crypto assets are “unworkable”: provide guidance or modify existing Custody Rule provisions to account for the unique characteristics of crypto assets, while ensuring investor protection; and collaborate closely with the CFTC and other relevant agencies on matters related to the jurisdiction of the crypto market. The hedge fund association also calls for the establishment of an objective, principles-based framework for categorising crypto assets to reduce uncertainty and regulatory overreach and clarity over which staking activities do not constitute securities transactions and permit protocol staking in ETFs, with appropriate investor safeguards.

“To foster innovation and protect investors, the SEC should establish clear and workable rules in the area of digital assets,” says AIMA CEO Jack Inglis. “This isn’t just a crypto issue, it matters to the alternative asset management industry, which needs regulatory clarity to participate responsibly. The US has what it takes to lead, but it needs a framework that matches the speed and scale of this technology.”