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SEC Reluctant to Define Digital Assets, Crypto Regulatory Uncertainty Continues

Press Releases Crypto News CryptoBriefing SEC Reluctant to Define Digital Assets, Crypto Regulatory Uncertainty Continues

Key Takeaways

The SEC does not want to define “digital assets” in relation to hedge funds and private equity funds.
This is not the first time the SEC is undecided on defining notable crypto terms, referring back to the Ether as a security speculation.

Despite proposing a definition for digital assets less than one year ago, the SEC needs some extra time for deliberation.

The United States Securities and Exchange Commission (SEC) is not prepared to define “digital assets” for hedge funds and private equity funds, a phrase commonly used as an umbrella term for assets such as cryptocurrency, NFTs and more. Nine months ago, the SEC detailed a proposal to define digital assets in regard to hedge funds and private equity funds, despite backtracking on its decision today.

Back in August 2022, the SEC proposed: “We are adding Question 66 to section 4 to collect information about private equity fund investment strategies.” This proposal would be defining digital assets and adding the word to the official definition of the above funds.

Instead, the SEC went down a different route, writing in its May 3 proposal, “We propose to define the term ‘digital asset’ as an asset that is issued and/or transferred using distributed ledger or blockchain technology (‘distributed ledger technology’), including, but not limited to, so-called ‘virtual currencies,’ ‘coins,’ and ‘tokens,’” with the commission considering these terms interchangeable.

It would have been the first time the SEC has actually used and defined digital assets, but “the commission and staff are continuing to consider this term and are not adopting ‘digital assets’ as part of this rule at this time.”

Further proposals are constantly being negotiated, such as last month’s new definition that added “DeFi” and cryptocurrency “exchanges” to a prop

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Author: Emily Tonelli

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