SEC’s Uyeda Criticizes Agency’s Crypto Disclosure Approach

SEC Commissioner Mark Uyeda has criticized the Securities and Exchange Commission’s current approach to crypto asset disclosures, calling it “problematic.” In a statement on July 1, Uyeda highlighted issues with how the SEC handles Form S-1 filings for crypto assets.

Uyeda’s statement, primarily about new rules for the Registered Index-Linked Annuities (RILA) Act, included a notable footnote addressing crypto regulation. He pointed out that the generic requirements of Form S-1 filings often don’t align with the unique nature of digital assets, leading to irrelevant information being required while omitting material details.

“This approach for crypto digital assets is problematic because it neither facilitates capital formation nor protects investors,” Uyeda stated. He emphasized the need for updated and tailored disclosure requirements for crypto assets to better serve both capital formation and investor protection.

Alexander Grieve from Paradigm noted that this was the first time Commissioner Uyeda explicitly called for a customized disclosure regime for crypto assets. Grieve suggested that the SEC would operate very differently under another administration.

The Blockchain Association also praised Uyeda’s comments, calling his approach “nuanced” and “innovation-forward,” which they believe is exactly what the industry requires.

Uyeda’s remarks follow the SEC’s lawsuit against Ethereum development firm Consensys on June 28. The agency alleged that MetaMask, a wallet application by Consensys, acted as an unregistered broker in the “offer and sale of securities.” The SEC also targeted Ethereum staking services Lido DAO and Rocket Pool, used by MetaMask for Ether (ETH) staking.

Consensys has sued the SEC in April after receiving a Wells notice, challenging potential efforts to classify ETH and related staking services as securities.