SEC Hosts First Crypto Roundtable to Clarify Digital Asset Regulations

The US Securities and Exchange Commission (SEC) convened its first crypto roundtable on March 21, marking a pivotal moment in the reassessment of the regulatory framework for digital assets. The event, titled "How We Got Here and How We Get Out – Defining Security Status," was the inaugural session of the “Spring Sprint Toward Crypto Clarity” series. This initiative aims to clarify whether decentralized digital assets should be classified as securities or commodities, a longstanding debate in the crypto industry.

The roundtable, held at the SEC’s headquarters, brought together a diverse group of experts, including managing partners, general counsels, law professors, and industry specialists. The discussions were moderated by Troy Paredes, Founder of Paredes Strategies LLC. Notable speakers included Collins Belton from Brookwood P.C., Sarah Brennan from Delphi Ventures, and Chris Brummer from Georgetown Law, among others. The event was open to the public and lasted from 1 p.m. to 5 p.m. ET, underscoring the SEC’s commitment to transparency and public engagement.

The primary goals of the roundtable were to clarify the status of various crypto assets under securities laws, identify areas within and outside the SEC’s jurisdiction, and develop modified paths to registration for crypto companies. Additionally, the discussions aimed to update guidance for special purpose broker-dealers and crypto custody, addressing key regulatory challenges faced by the industry.

Panelists ranged from crypto advocates to skeptics, and the session focused on longstanding debates, including the classification of digital assets and the limits of existing securities laws in addressing decentralized technologies. Advocates defended decentralization as a gauge for determining whether a token is a security. At the same time, skeptics argued that the current definition by the Howey test works, as the SEC won more motions than lost.

Discussions extended to what characteristics of digital assets, if any, justify different treatment under the law. Crypto advocates at the event suggested that beyond asking whether something is a security, the more relevant question may be whether certain securities merit exemptive relief. Proponents argued that one possible differentiator is the degree of control exerted by issuers, a concept that better captures the decentralized nature of many blockchain networks.

Lee Reiners, a lecturing fellow at the Duke Financial Economics Center, said that all panelists agree that Bitcoin (BTC) is not a security because it is sufficiently decentralized. However, he added that drawing a line to define if something is sufficiently decentralized or an investment contract is impossible, citing a Commodity Futures Trading Commission (CFTC) report that divides decentralization by spectrums based on different aspects.

Skeptics of the crypto industry presented contrasting perspectives. Former SEC enforcement official maintained that the agency’s responsibility is to protect investors who purchase digital assets. Additionally, crypto critics argued that the Howey Test remains a sufficient legal standard and that the SEC’s track record of litigation success affirms its interpretive authority. Despite these divisions, participants generally agreed that clearer definitions and regulatory consistency would benefit the industry and the SEC’s oversight responsibilities.

The roundtable represents the first in a series of efforts to modernize the agency’s stance on crypto markets while balancing investor protection with technological innovation. It signals the beginning of the regulator’s reassessment process. The event concluded with a consensus among participants on the need for a more defined regulatory framework. The discussions highlighted the complexities involved in classifying crypto assets and the importance of balancing innovation with investor protection. The SEC’s proactive approach in engaging with industry experts and the public signals a commitment to fostering a regulatory environment that supports the growth of the crypto industry while mitigating risks.