As one of the developers of the crypto indices and a leading player in a U.S. stock exchange, Nasdaq has made some scrutiny recommendations to the regulators of America regarding the supervision of crypto assets. It has recently come to our attention that the SEC should be spending its effort in formulating an operational mechanism on how the digital assets will be placed in the four “buckets” system. Nasdaq provided the SEC with a 23-page letter detailing the class scheme, which contains rationale for classifying crypto assets and arguments for supervision jurisdiction principles asserting major jurisdictional focus aimed at US supervision.
This classification, according to Nasdaq, shall help clarify which agency will supervise any of the types of digital assets under the comprehensive American legal framework on crypto assets. Countering an invitation, the letter was addressed to the monocratic direction of the SEC’s crypto task session. The other Pierce was eager to hear suggestions concerning the vision development of her domain.
The Requirement for Accurate Taxonomic Classification
As it was explained in the letter, the principal argument of Nasdaq focuses on the need for precise taxonomy concerning digital assets. The companies’ position is that taxonomy is vital for U.S. crypto regulation and for the existing market ecosystem to seamlessly onboard digital assets. The letter commented, “While a stock by any other word would still be a stock, the existing market ecosystem can readily absorb digital assets by establishing the proper taxonomy and calibrating certain rules to reflect what is truly new and novel about digital assets.” This assumes the trouble is with definition and calibration, not with the digital aspect itself.
Four categories outlined by Nasdaq
Nasdaq has suggested dividing the regulation of digital assets into four distinct categories. The first is financial securities, which are described as tokens linked to assets already classified as securities, such as stocks, bonds, and ETFs. Nasdaq contends that these should be treated the same as their underlying assets. The second is digital asset investment contracts, which are tokenized contracts satisfying securities with a modified Howey test version. The third, digital asset commodities, focuses on commodities per US definition. Finally, the fourth category, “other digital assets,” is meant for assets that do not fit under the previous definitions and thus should not be subjected to securities or commodities stipulations.
Determining Responsibilities of Each Agency and the Act of Trading
Like any taxonomy, Nasdaq’s aims for defining agency roles place the SEC in charge of overseeing financial securities and the CFTC, digital asset commodities. The letter acknowledges jurisdictional borders will be determined by the agencies likely to be directed by some future Congressional legislation. Concerning trading, it is noted in the letter, signed by Nasdaq chief regulatory executive John Zecca, stating, “Digital assets that constitute financial securities must trade as they do today.” Nasdaq goes on to propose a contrapositive rule that the SEC and CFTC create a crossover trading suspension permitting great bundle trap trading for multiple asset types, investment contracts, commodities, and others.
Expert Opinion and Suggestions from Nasdaq
Nasdaq drew upon its experience within the digital assets regulatory frameworks to highlight the firm’s “trading and clearing services, market and trading surveillance, and central securities depository technology support digital assets platforms on six continents.” Moreover, they emphasized the global crypto firm model captures all geo-sectional traditional finance investor activity at once, which requires regulatory scrutiny for market integrity measures. Focus on protection for the investor and market integrity was fundamental to the recommendations. Such measures suggest defined boundaries and precision guidelines for regulated growth of the digital asset in the United States.
