Jarrod Loadholt, Partner at Ice Miller, joins Cheddar News' Closing Bell, where he breaks down the latest proposal by the SEC and explains how it could allow the agency to make major regulatory moves within the cryptocurrency space if approved.

Closing Bell

New SEC Proposal Could Lead to Sweeping Regulation for Crypto

with the major tokens rallying this afternoon. It could pose a tricky question for investors. Buy into what could be the start of significant turnaround or hold steady because the volatility of the market could drag prices lower date and in the days to come joining us now to help us answer this is Jared load hauled partner at Ice miller, a law firm that says it is dedicated to helping its clients stay ahead of the changing world. Welcome. Welcome to the show Jared with significant day over day games by major Cryptocurrency tokens is today, the day we see tokens like Bitcoin like ether begin to ascend a little closer to the all time highs that they said in november. I mean, yeah, I mean it's, it's forward progress, right, And this momentum, you had a good jobs report today. If you've got some good news out of India this week, you saw the S&P 500 and NASDAQ both up on the tech side. So there was some positive I think, uh, winds kind of behind their bags this week. So yeah, I definitely think you've seen some recovery from some of the price stiffs that you saw in the previous week. So it's been a good week for sure. From your vantage point Jared what has been concerning investors when it comes to investing in crypto the past couple of months? I mean, other than prices, I mean, there's obviously a question of what will Washington do about crypto and what the future of crypto looks like in the United States. So I think that affects the way I think a lot of investors, I think are looking at this market in particular, which I think in turn affects prices. I think the other, you know, other I think matter to be monitored at least his interest rates as well. So I think as the american economy, I think kind of dips in and so forth. You'll start to see some of that affect crypto prices, just like every other asset class. But there's a real focus I think in Washington around digital currencies that absolutely, I think in front of mind for many of investors, but this has been a good week because we did not see, I think anything crazy on this front of Washington, but what we saw was expected, but it's definitely, I think gonna be a long term player in terms of how we see prices moving in the future, the SEc has pushed to regulate crypto currency currency is certainly not going to go away anytime soon. We know that we understand they're planning to introduce what's being described as a proverbial trojan horse. How could this hurt crypto investors? Well, the way that the sec is approaching this is through their alternative trading systems are a T. S. Regulation, which regulates exchanges. And if you kind of read between the lines of the 650 for page proposal, I think what you see is an attempt to regulate defi protocols and exchanges broadly in ways that the sec believes that they currently cannot. And I think if you ask most exchanges, they would say that there's nothing legally that requires that they registered with the sec. And this feels like an attempt by the sec to be able to do that. Right. And so I think long term for investors. I mean, I think there's a, there's a push and a pull. I think to some extent, if you are concerned about investor safety and protection, you may view this as a positive development. But if you're more concerned that this is a move that's more of a nose of camel's nose under the tent, which would portend for more regulation, harsher, regulation, harsher, Uh, enforcement oversight of exchanges. Then I think as a, as a, as an investor who operates on these exchanges, you would be concerned about that, right? And so I think this is concerning. I think for many folks in the industry equally concerning is there's only a 30 day period to comment, Which is relatively short for a pretty extensive. Again, 650 odd page proposal, you would hope that people would have more than 30 days to comment on that. And I think one of the things that we've seen from Capitol Hill is you've seen a number of offices say something about that, right? That they believe that something is significant. Not only should require more than 30 days, but this may be, I think right at the outer edge of what the sec can do and may require Congress. And this may not be something that the sec can do in the first place. So I think there's some really big legal questions on the horizon, uh, for the sec and for this regulation. So I don't think this is Even though this 30 day period closes at the end of February, this will not be the end of this conversation because I think this is a very, very, very significant development that I think it affects the entire ecosystem. Karen, I have about 30 seconds and I don't mean to rush this answer, but I do want to ask you this question. What are some things that tighter regulation could lead to here in the US do you think it presents the industry with the ceiling? Yeah, I mean, look, it could, I mean, it could cap innovation. I mean, I think there are lots of folks who are concerned that if you have a regulator, that for example, maybe too overzealous around new products, new offerings that the regulator indians, won't there be a chilling effect on regulation. So I think ultimately what folks industry probably said they want is responsible innovation. But regulators that are actually trying to strike the appropriate balance between oversight and investor protection and innovation. So yes, I think, I think there's a real concern that tighter regulation would cap innovation, which I think none of us want to see. Yeah, thank you so much Jared load hold partner at Ice Miller. We really, really appreciate your time. Thank you so much Jared.