Nasdaq Urges U.S. Regulators to Define Digital Assets in Four Categories
Nasdaq, known for operating one of the premier U.S. stock exchanges and a crypto index, has submitted a 23-page letter to the Securities and Exchange Commission’s crypto task force, advising regulators to carefully define digital assets in four distinct categories. This categorization, according to Nasdaq, would help determine the appropriate regulatory oversight for each type of digital asset.
In response to an invitation from Commissioner Hester Peirce to provide input on future regulations, Nasdaq argued that establishing a clear taxonomy for digital assets and aligning rules accordingly would enable the market to integrate these assets effectively.
The Four Proposed Categories of Digital Assets
Nasdaq suggests that digital assets should be classified into the following categories:
- Financial Securities: Tokens linked to assets that meet the definition of securities, such as stocks, bonds, and ETFs, should be treated in the same manner as their underlying assets.
- Digital Asset Investment Contracts: These tokenized contracts should adhere to a revised version of the Howey test to determine their status as securities.
- Digital Asset Commodities: Digital assets that align with the U.S. definition of commodities fall under this category.
- Other Digital Assets: Any digital assets that do not fit into the above categories should be classified separately.
Nasdaq recommends that the Securities and Exchange Commission oversee financial securities, while the Commodity Futures Trading Commission should regulate digital asset commodities. Collaboration between the two agencies, guided by potential legislation from Congress, will be essential in defining the boundaries of their respective jurisdictions.
The letter, signed by Nasdaq’s chief regulatory executive John Zecca, emphasizes that digital assets categorized as financial securities should be traded in a manner consistent with current practices.
Nasdaq also proposes the creation of a special designation for platforms that can facilitate the trading of digital asset investment contracts, commodities, and other types of assets. This approach aims to streamline regulatory oversight and enhance market efficiency.
Ensuring Safety and Compliance
Nasdaq highlights its expertise in digital asset trading and clearing services, market surveillance, and technology support on a global scale. The company suggests that regulators consider implementing additional safety measures or restrictions for firms that engage in end-to-end investor activities, a common practice among existing crypto firms.
Overall, Nasdaq’s recommendations seek to establish a clear regulatory framework for digital assets, promoting market integrity and investor protection in this rapidly evolving sector.