SEC Commissioner Peirce: Ten Tasks for the Crypto Working Group in the Future

[SuperExMedia]

On February 5, 2025, SEC Commissioner Hester Peirce officially announced the ten key focus areas of the Crypto Working Group.

This announcement has drawn widespread attention in the crypto market and is seen by industry insiders as a significant shift in crypto regulation—from an enforcement-driven approach to a balanced strategy of guidance and regulation. As a veteran in the crypto space, Peirce used her childhood road trip experiences to vividly illustrate the regulatory journey of the crypto industry:

"When I was a child, my family would take an annual road trip from Ohio to Maine and back. That was a different time:

• If the car broke down, there were no cell phones to call for help.
• We used paper maps and handwritten directions instead of mobile apps providing step-by-step navigation.
• Forget about booking hotels online—you had to look for a sign in the distance and stop to check for vacancies.
• There were no podcasts or audiobooks, just a noisy radio struggling to find a local station.
• My siblings and I weren’t watching videos on a screen in the backseat; we were scanning license plates of passing cars, competing to 'collect' as many states as possible in a technology-free road trip game."

Today, road trips are entirely different. In most aspects, technology has made them safer and more enjoyable. Just as we have moved from paper maps to GPS navigation, the regulatory framework for the crypto market is becoming increasingly clear. So, what do these ten priorities mean? How will they impact the future of the crypto market? Let’s dive in.

1. The "GPS" for the Crypto Market: Clarifying the Regulatory Framework

Peirce emphasized in her statement that the goal of the Crypto Working Group is to provide a clearer regulatory framework for the crypto industry. This is akin to equipping a car driving in the fog with GPS navigation, helping market participants understand "where the road leads." Below are the core contents of the ten key tasks and their potential impacts:

1. Defining the Securities Status of Crypto Assets
   The working group will conduct an in-depth study on the classification of crypto assets under securities law. This issue is foundational, as determining the nature of an asset is crucial for applying appropriate regulatory rules. For example, are Bitcoin and Ethereum classified as securities? This long-standing debate needs a definitive answer. Clarifying this will help establish legal boundaries for the crypto industry and facilitate its mainstream adoption. If Bitcoin and Ethereum are confirmed as non-securities, decentralized projects will have more room to grow. Conversely, if they are classified as securities, they may face stricter regulatory scrutiny, affecting market liquidity and innovation.
2. Determining the Scope of SEC’s Jurisdiction
   The working group will identify which crypto activities fall outside the SEC’s regulatory purview. This is aimed at avoiding a "one-size-fits-all" regulatory approach and leaving room for innovation. For example, certain decentralized finance (DeFi) projects may not be subject to traditional securities regulations. As DeFi rapidly evolves, distinguishing between decentralized protocols and traditional securities products has become a major challenge. Peirce emphasized that regulation should be flexible, ensuring investor protection without stifling innovation.
3. Temporary Relief Measures for Token Offerings
   The working group is considering temporary relief measures that would allow certain tokens to trade freely without registration, provided that issuers maintain transparency and comply with oversight requirements. This initiative aims to provide a "path out of the fog" for existing tokens while encouraging greater disclosure. This measure is expected to facilitate early-stage project fundraising while increasing market transparency. However, balancing comprehensive disclosure with project privacy remains a challenge.
4. Optimizing Registration for Token Offerings
   The working group will explore modifications to existing registration pathways, such as Regulation A and crowdfunding rules, to make compliance easier for token issuers. This will reduce compliance costs for startups while protecting investor interests. By simplifying registration procedures and enhancing compliance standards, more innovative projects can be launched without being hindered by overly complex regulatory processes.
5. Updating Rules for Special Purpose Broker-Dealers
   The working group plans to update rules for special-purpose broker-dealers to allow them to custody both securities and non-securities crypto assets. This change will enhance market liquidity. As more crypto assets are classified as securities or securitized assets, the role of traditional securities dealers in the crypto market becomes increasingly critical. Providing custody solutions for these entities will help improve asset liquidity and reduce price volatility.

2. The "Fuel Stations" for the Crypto Market: Improving Infrastructure

Beyond clarifying the regulatory framework, the working group will also focus on strengthening the infrastructure of the crypto market, similar to ensuring that a long road trip has enough fuel stations and repair stops to keep the journey smooth.

6. Custody Solutions for Investment Advisors
   The working group will collaborate with investment advisors to establish a secure custody framework to ensure the safety of client assets. This move will attract more traditional financial institutions to enter the crypto market. Many institutional investors have hesitated due to regulatory uncertainties and security concerns surrounding crypto assets. Establishing a robust custody framework will boost confidence and drive more capital into the market.
7. Regulatory Clarity for Crypto Lending and Staking
   The working group will determine whether crypto lending and staking programs fall under securities laws and explore compliance measures. This will provide greater legal certainty for DeFi projects. As lending and staking markets continue to expand, their regulatory status has become a pressing issue. By setting clear standards, regulators can protect investors while fostering industry growth.
8. Approval of Crypto Exchange-Traded Products (ETPs)
   The working group will assist in evaluating rule changes proposed by self-regulatory organizations (SROs) and consider modifications to existing ETPs, such as allowing staking and physical creation/redemption mechanisms. This will provide investors with more options. Enhancing ETPs with staking and physical transactions will make these products more attractive, enabling greater diversification in crypto asset portfolios.
9. Updating Rules for Clearing Agencies and Transfer Agents
   The working group will examine how crypto assets intersect with clearing agency and transfer agent regulations, aiming to modernize traditional financial markets. This initiative will pave the way for security tokenization. As tokenization advances, traditional market infrastructure must adapt to handle the settlement and clearing of crypto assets.
10. Cross-Border Regulatory Sandbox for International Cooperation
    The working group plans to establish a cross-border regulatory sandbox, allowing limited-scale, time-bound testing of international crypto projects. This will provide valuable experience in global regulatory collaboration. Given the global nature of the crypto market, international regulatory cooperation is inevitable. A cross-border sandbox can test regulatory alignment between different jurisdictions, fostering unified global crypto regulations.

3. The "Traffic Lights" of the Crypto Market: Balancing Risk and Opportunity

Peirce emphasized that while crypto regulation comes with risks, it also presents tremendous opportunities. The working group’s goal is to strike a balance—protecting investors while encouraging innovation.

1. Anti-Fraud Protections
   The working group will carefully consider anti-fraud measures to ensure the crypto market does not become a haven for scammers. If fraudulent activities extend beyond SEC jurisdiction, the group will collaborate with other regulators or escalate matters to Congress. Strengthening anti-fraud enforcement is key to ensuring the long-term health of the crypto market.
2. Investor Education and Responsibility
   Peirce reminded investors that the crypto market is inherently risky, and the government will not bail out their investment decisions. This stance aims to enhance risk awareness while discouraging overreliance on regulation. Improved investor education will contribute to a more stable and transparent market.
3. Industry Self-Regulation and Government Oversight
   Peirce repeatedly stressed the importance of industry self-regulation alongside government oversight. She encouraged the crypto industry to actively participate in shaping the regulatory framework to support market growth. Self-regulation helps maintain order and can reduce the burden on government agencies.

4. The "Road Ahead" for the Crypto Market: Challenges and Expectations

Despite the working group’s roadmap, challenges remain. Peirce acknowledged that crypto regulation takes time, requiring patience and proactive engagement from market participants. International regulatory cooperation will be crucial, and balancing innovation with investor protection will be key.

Conclusion: A New Chapter for Crypto Regulation

The SEC Crypto Working Group’s ten priorities mark a new chapter in crypto regulation. From defining asset classifications to enhancing infrastructure, strengthening anti-fraud measures, and fostering international collaboration, these initiatives will provide clearer rules and broader growth opportunities for the crypto market. However, regulatory progress requires time, patience, and collective effort.

As Peirce put it: “This journey is full of risks, but it is also exciting.” Buckle up, follow the "GPS" of crypto regulation, and drive toward a brighter future.