A securities-like approach means applying regulations designed for traditional investment contracts to digital assets. This regulatory strategy involves classifying certain digital assets as securities based on existing legal tests, such as the Howey Test, and then subjecting them to the corresponding rules for investor protection, disclosure, and market conduct. It aims to leverage established financial laws to govern novel digital instruments. This approach provides a familiar framework for regulators but can present challenges due to the unique technical properties of crypto assets.
Context
The securities-like approach is a prominent regulatory stance, particularly in jurisdictions like the United States, where the SEC frequently applies it to various crypto tokens. Debates center on the appropriateness of applying legacy definitions to decentralized technologies and the potential for stifling innovation. Achieving greater clarity on token classification under this approach remains a critical issue for the digital asset industry.
The UK's draft regime mandates that crypto exchanges and dealers adopt traditional finance standards for resilience and client protection, setting a clear divergence from MiCA.
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