SEC set a public forum on digital assets and distributed ledgers

The U.S. Securities and Exchange Commission announced on March 15, 2019 that its staff would hold a public forum devoted to distributed ledger technology and digital assets. Scheduled for May 31, 2019 at the agency’s Washington headquarters, the meeting would examine initial coin offerings, digital-asset platforms, ledger innovations and their effects on investors and markets.

The development mattered because it put several of the cryptocurrency industry’s most disputed regulatory questions into a formal, public SEC process. The announcement did not resolve those questions, but it established a venue where agency staff, academics and industry participants could discuss them on the record.

What the SEC announced

The March 15 release identified the event as the second SEC fintech forum and said it would be open to the public and webcast through the agency’s website. The SEC had not yet published an agenda or named participants; it said those details would follow in the coming weeks.

FinHub, the SEC’s Strategic Hub for Innovation and Financial Technology, was assigned to organize the forum. The agency had launched FinHub on October 18, 2018 as a central point for engagement on distributed ledgers, digital assets, automated investment advice, digital marketplace financing and artificial intelligence.

The launch record described FinHub as more than an events program. Its stated functions included receiving inquiries from innovators, distributing information about SEC initiatives, building financial-technology knowledge across the agency and coordinating with other regulators. The May forum therefore represented an early public test of the engagement structure the SEC had established five months earlier.

Dialogue inside an enforcement framework

The forum announcement arrived against a regulatory backdrop that was already consequential for token issuers and trading businesses. In a November 16, 2018 joint statement, three SEC divisions said established federal securities laws continued to apply when securities were issued or traded through blockchain technology.

That statement organized the agency’s concerns into three broad areas: offers and sales of digital-asset securities, investment vehicles and advisers dealing in those assets, and secondary-market trading. It also warned that a platform’s activities could trigger exchange, broker or dealer registration requirements depending on the facts and functions involved.

The March 15 forum notice did not retreat from that position. Its significance was procedural: the SEC was pairing enforcement and compliance statements with a public channel for gathering technical and market information. For companies, the announcement offered access and visibility, but not regulatory approval or a safe harbor.

What remained uncertain on March 15

The SEC did not announce a rulemaking, exemption, enforcement settlement or determination that any particular token was—or was not—a security. It also supplied no new test for classifying digital assets and made no commitment that the forum would produce binding guidance.

Any interpretation that the announcement broadly legalized cryptocurrency activity, endorsed an offering model or approved a trading platform would exceed the contemporaneous record. What could be verified on March 15, 2019 was narrower: the agency had committed to a public discussion covering capital formation, platforms, ledger technology and investor impact.

Later confirmation

On April 24, 2019, the SEC published an agenda containing four panels covering capital formation, trading and markets, investment management, and distributed-ledger use cases. The SEC’s archived event record confirms that the forum occurred on May 31, 2019. Those later records confirm implementation of the March announcement; they do not change what the March 15 notice itself established.