- The SEC should establish a clear classification for digital assets, according to Nasdaq.
- The proposal’s main goals are to safeguard investors and promote market innovation.
- Digital assets that are clearly classified will increase regulatory compliance and trust.
Nasdaq has called on the U.S. Securities and Exchange Commission (SEC) to establish a clear taxonomy for digital assets. In a letter, Nasdaq’s Chief Regulatory Officer, John Zecca, emphasized the need for a well-defined classification system that could allow digital assets to be seamlessly integrated into existing market mechanisms. According to Zecca, the tokens should be treated like traditional financial securities, ensuring they follow the same regulations, whether in tokenized or traditional forms.
Nasdaq has recommended that digital assets be classified under clear categories, including “financial securities”, “digital asset investment contracts”, and “digital asset commodities.” The exchange also suggested that some digital assets be subject to lighter regulations while still under SEC oversight. This classification would provide clarity to the market and allow digital assets to be traded in the same manner as traditional financial instruments.
Nasdaq’s Vision for Digital Asset Regulation
Nasdaq emphasized the importance of maintaining investor protection while encouraging innovation within the digital asset space. The exchange believes that the existing financial system can absorb digital assets as long as the proper rules are in place to reflect the unique characteristics of these assets. Zecca pointed out that despite the new technology, the fundamental nature of an instrument remains the same. This means that digital assets should be regulated as traditional securities when they share similar attributes.
In its letter to the SEC, Nasdaq also proposed the establishment of a new category for trading systems that manage different types of digital assets. The proposed system aims to give digital asset exchange operators more flexibility by combining regulated conditions with existing market frameworks.
Related: Paul Atkins Calls For Clear Crypto Rules at SEC Roundtable
Calls for Clear Classification and Collaboration
Nasdaq expressed concerns about the current fragmentation of digital asset regulations, which hinders institutional involvement. The lack of clarity about whether a digital asset is a security, commodity, or another form has created confusion and inefficiencies.
Nasdaq urges the SEC to collaborate with other regulatory bodies, such as the Commodities Futures Trading Commission (CFTC), to establish a clear taxonomy. This would not only provide transparency but also foster trust among investors and encourage more comprehensive regulatory compliance across digital asset exchanges and service providers.
Thus, Nasdaq argues that a stable, investor-friendly regulatory environment is essential for digital assets to thrive without undermining traditional finance. By distinguishing between digital assets, Nasdaq feels that regulators can instill a measure of certainty and stability that the market desperately needs.
