At a Glance
- New SEC submissions add pressure on regulators as Coinbase CEO calls for compromise.
- Louisiana’s HB 488 backs self-custody rights and demands robust investor protection.
- The Blockchain Association seeks clarity that token-equity traders are not automatically dealers.
- Why it matters: The debate shapes the future of U.S. crypto regulation and investor safety.
{journalist} reported that new SEC submissions are adding pressure on regulators as Coinbase CEO Brian Armstrong calls for compromise to pass market structure legislation.
Regulatory Submissions Add Pressure on the SEC
On Tuesday, the SEC Crypto Task Force “Written Input” page received two new submissions. Both focus on self-custody rights and the regulation of proprietary trading in tokenized and decentralized finance (DeFi) markets. The platform is a formal channel where stakeholders submit written comments on proposed regulatory changes.
The SEC’s Crypto Task Force is responsible for reviewing and drafting regulations that apply to digital assets. By posting the submissions on its “Written Input” page, stakeholders signal their concerns and shape the policy debate. The timing of these filings coincides with a critical period in which the bill’s language is still being refined.
Louisiana Submission: Protecting Self-Custody Rights
The Louisiana submission, presented by “DK Willard,” cites state law HB 488, which affirms residents’ right to self-custody digital assets. It argues that upcoming federal crypto market-structure legislation should preserve:
- Strong registration requirements
- Transparency standards
- Anti-fraud and anti-manipulation safeguards
The letter warns that exemptions in some federal proposals could allow developers and platforms to sidestep core investor-protection obligations, raising the risk of fraud and financial crime for consumers.
Why Self-Custody Matters
Self-custody means individuals hold private keys to their digital assets, giving them full control and eliminating reliance on third-party custodians. The letter stresses that removing these protections could undermine consumer confidence and increase the likelihood of illicit activity.
Blockchain Association Letter: Clarifying Dealer Rules
The Blockchain Association Trading Firm Working Group sent a separate letter. It requests that the SEC clarify that companies trading tokenized equities and DeFi assets only for their own account, without customer solicitation, custody or agency execution, should not automatically be treated as “dealers” required to register under the Exchange Act. The letter also notes that existing broker-dealer rules were designed for traditional markets and may need adaptation for smart-contract settlement.
Implications for Token-Equity Traders
If the SEC applies dealer rules indiscriminately, many firms could face costly compliance burdens. The Association argues that a tailored approach would preserve innovation while still protecting investors.
Negotiations Over CLARITY Continue
The two submissions arrive as negotiations over the federal crypto market-structure bill, CLARITY, continue in Congress. Senior White House crypto adviser Patrick Witt urged the industry to accept compromises to get the act passed while Republicans still control Congress and the Trump administration remains in power. The debate centers on balancing stable-coin yield, DeFi liquidity and investor-protection concerns within the legislative text.
If CLARITY passes, it would create a comprehensive framework covering stablecoins, tokenized securities, and DeFi. The bill’s provisions aim to protect consumers while encouraging innovation, but critics argue that some rules could be too restrictive.
Political Context
With a divided Congress, lawmakers face pressure to deliver a compromise that satisfies both sides. The industry’s push for clarity is seen as a way to accelerate the bill’s passage.
Armstrong Calls for a Win-Win
Speaking from Davos on Wednesday, Coinbase CEO Brian Armstrong acknowledged progress made so far on advancing CLARITY and said, “We’re all working together to find a win-win scenario for everyone, especially the American people.” His statement underscores the industry’s push for a regulatory framework that protects consumers without stifling innovation. Armstrong’s remarks align with Coinbase’s broader lobbying effort, which includes testifying before congressional committees and engaging with regulators on technical standards.
Key Takeaways
- SEC receives fresh input demanding stronger self-custody protections and clearer dealer definitions.
- Louisiana’s HB 488 backs robust registration and anti-fraud measures.
- The Blockchain Association seeks to exempt proprietary token-equity traders from dealer registration.
- CLARITY negotiations remain in flux, with industry leaders calling for compromise.
- Coinbase’s CEO frames the debate as a collaborative effort for the American public.
