U.S. SEC: There is limited case law regarding the application of securities laws to crypto assets, and it is coordinating multiple parties to supervise this field.

According to a statement issued by the SEC’s Office of Inspector General, the SEC’s ability to maintain effective supervision requires it to continuously monitor market conditions and, where appropriate, adapt and modernize its expertise, rules, regulations, and supervisory tools and activities. . In this regard, two emerging areas pose certain challenges to the SEC: cryptoassets and artificial intelligence (AI). Given the rapid emergence of these and other areas of innovation, the SEC must continually adapt and build new expertise and capabilities. The SEC recognizes that the rapid growth of cryptoassets is one of several “evolutionary risks.” The "Congressional Budget Justification for Fiscal Year 2024" states that the crypto asset market lacks basic disclosures about assets and companies executing investor transactions. SEC Chairman Gary Gensler has repeatedly commented on the widespread failure of cryptoasset market participants to comply with existing securities laws. It has been widely reported that the SEC has taken enforcement actions related to crypto assets, many of which have been vigorously challenged by defendants. However, as reported by the Financial Stability Oversight Council (FSOC) and the Government Accountability Office (GAO), there are gaps in the regulation of crypto-asset activities in the United States. Specifically, no federal financial regulator has comprehensive authority to regulate the spot market for non-securities cryptoassets, and there are regulatory gaps in regulating certain stablecoins (cryptoassets). Therefore, FSOC (including the SEC Chairman) and GAO recommend that Congress consider legislation to provide federal oversight of these issues. Among other things, the FSOC recommended strengthening its members’ capabilities in data and analytics, monitoring, oversight and regulation of crypto-asset activities. GAO further recommended that seven federal financial regulatory agencies establish or adjust existing coordination mechanisms. The SEC's comments on the draft GAO report noted that efforts are underway to coordinate cooperation among federal financial regulators through FSOC, the President's Working Group on Financial Markets, the Council on Financial Literacy and Education, jointly engaged international agencies, and other bilateral and multilateral efforts. For fiscal year 2024, the SEC is seeking to add positions in the Examination, Trading and Markets, and Enforcement Divisions, in part to address critical and evolving risks associated with crypto-assets. The Office of General Counsel and the Office of International Affairs are also seeking additional positions to focus on crypto-asset regulation, policy and related matters. Furthermore, case law regarding the application of securities laws to crypto-assets is limited and still developing. As recent decisions illustrate, even judges in the same district can rule inconsistently on similar facts or issues. It may take years for the law in this area to be clear enough that outcomes can be reasonably predicted. This uncertainty may impact the SEC’s enforcement decisions and priorities.