The Securities and Exchange Commission (SEC) released yesterday, June 22, its regulatory priorities on its Spring 2022 Unified Agenda of Regulatory and Deregulatory Actions. This report lists short- and long-term regulatory actions that the agency plans to take in 2022.
“When I think about the SEC’s agenda, I’m driven by two public policy goals: continuing to drive efficiency in our capital markets and modernizing our rules for today’s economy and technologies,” said SEC’s Chairman Gary Gensler.
The list published by the SEC includes 53 rules either at the proposed stages or a final stage. They cover a wide range of topics, from new climate change disclosure rules to corporate board diversity or digital practices. But the most noticeable issue in this list is not any of the rules included, but rather what is not included. The list doesn’t include any rule tackling the most pressing issues related to crypto assets. Commissioner Hester Peirce makes echo of this absence in an opinion published yesterday. “Although the Agenda includes rules that might regulate crypto protocols or platforms through an unmarked backdoor, it doesn’t appear to include any rules primarily intended to grapple with the main regulatory questions that have arisen around these assets.”
The rule that Peirce refers to as an “unmarked backdoor” is the Proposed Rule No. 34-94062, Amendments to Exchange Act Rule 3b-16 Regarding the Definition of “Exchange” that is included in the list and which could bring unregulated trading venues, like crypto exchanges or DeFi platforms, under the SEC’s jurisdiction. However, the commissioner noted that “numerous commenters have responded to this rulemaking with questions about its application to crypto.”
But Peirce didn’t stop her criticisms at the absence of substantive crypto rules. She disagreed, in general, with the approach taken by the agency. “Chair Gensler’s Regulatory Flexibility Agenda for the SEC sets forth flawed goals and a flawed method for achieving them,” she said.
Peirce divided her comments into two areas. One covered how, in her view, the SEC is devoting the agency’s limited resources to rulemaking proposals that are disconnected from the agency’s core mission, and the second addresses the high number of rulemaking proposals with short deadlines for comments and the impossibility for the addressees to properly evaluate and assess the impact of these rules on their businesses.
On the first issue, the commissioner complained that the agency “continues to shun issues at the core of our mission in favor of shiny objects outside our jurisdiction.” She missed important rules such as updates to the investment adviser custody rules, data security rules for the Consolidated Audit Trail or updates to the electronic recordkeeping rules for broker-dealers.
She also raised concerns in the second part of her opinion about how small — or even big — players may not be willing to provide feedback to the rulemaking proposals if the agency is issuing 3-5 rules per month without providing sufficient time for feedback. “The agenda’s timetables reveal that the rush of radical rulemakings remains relentless, despite pleas from almost every type of market participant and other interested party that the Commission slow down so that the public can catch up and provide meaningful input on our outstanding proposals,” she said.
Peirce urged the Commission to provide more time to comment on the rules “at the time” the Commission proposes new rules. This, she argued, would allow for commenters to gather more data or even conduct market studies that will furnish the agency with more information to craft the rules.
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