Federal judges won’t be hurried into ruling on the weighty questions of defining tokens as securities. And if the commission led by crypto adversary Gensler chooses to make everything last as long as possible, delay costs the industry more than it costs the SEC’s legal team.
In the meantime, the SEC and the Internal Revenue Service each have proposed rules awaiting finalization that could rock the industry. The SEC just released an updated rulemaking agenda, and it’s currently targeting April 2024 for finalizing a rule that would require investment advisors to keep customers’ crypto assets with “qualified custodians,” which Gensler argued doesn’t include today’s crypto exchanges, and the agency is aiming for the same month to finish a separate rule to expand the definition of regulated exchanges to rope in crypto entities, including decentralized finance (DeFi) projects. The big IRS rule to establish a system for taxing crypto also threatens to capture DeFi.
On the political stage, the outcome of the U.S. presidential and congressional elections could determine whether a new administration will be swapping regulators. It could also decide whether Republicans lose their grip on the House and if the Democrats get similarly sidelined in the Senate – both outcomes are a very real possibility that could keep Congress divided – though the actual results of the elections won’t develop until the following year.