Nine members of congress have written a letter asking the Securities and Exchange Commission to get its security token guidance straightened out.
In a Dec. 9 letter to SEC Chairman Jay Clayton, several members of the Congressional Blockchain Caucus led by Tom Emmer (R-MN) asked the commission to verify rules as to which broker-dealers can custody digital securities. Broker-dealer licensing is required to sell securities in the U.S.
The letter also addresses the Financial Industry Regulatory Authority (FINRA), a self-regulating body that registers U.S. broker-dealers under SEC guidelines. Currently, the rules are unclear, which has resulted in a colossal hold-up in registration. As the letter puts it:
“In the absence of guidance from the SEC, FINRA has not outright denied any brokerdealer applications that involve the custody of digital securities, which would render the applications eligible for appeal. Rather, FINRA has allowed the applications to languish—often for years—or asked the applicants to withdraw such applications.”
Many have noted the stalled ecosystem for security tokens in the U.S. Unlike decentralized cryptocurrencies like Bitcoin or Ethereum, security tokens register as securities but can trade in a more decentralized fashion thanks to blockchain technology.
Today’s letter encouraged the securities regulator to follow the lead of the Office of the Comptroller of the Currency, which this summer approved national banks to custody cryptocurrencies.
Blockstack’s STX tokens are an example of a registered security that are looking to leave that status by demonstrating decentralization of the network. That determination, too, is waiting on SEC approval.
Congressman Emmer’s team had not responded to Cointelegraph’s request for comment as of publication time.