On August 1, the SEC began a national tour to engage with early-stage crypto startups, aiming to hear small firms' views on new regulations.
Launch of the SEC Tour
The SEC launched its Crypto Task Force on the Road, a ten-city tour aimed at gathering insights from small crypto startups. The initiative seeks to understand how existing regulations align with the actual operations of companies and identify areas where regulations hinder innovation. The tour will cover ten cities, starting in Berkeley on August 4 and concluding in Ann Arbor on December 5. Participation is limited to firms with fewer than ten employees and under two years of activity.
SEC's New Approach to Dialogue
Historically, SEC's engagement with crypto startups revolved around enforcement actions. From 2020 to 2024, the agency filed over 120 cases against market participants. Under Gary Gensler, it asserted that most digital tokens fell under securities laws. However, the situation began to shift with Donald Trump's return to office, who instilled a more open dialogue approach by appointing Paul S. Atkins as SEC Chair and launching Project Crypto.
Issues Discussed by Startups
Small teams are expected to address issues including token classification, high compliance costs, banking access, and custody requirements. Startups will likely highlight the uncertainty around token classification affecting their ability to secure investments, alongside the high costs of compliance that may stifle innovation. This tour represents the first structured dialogue with regulators on these pressing concerns.
The SEC's shift towards open dialogue with crypto startups may mark a turning point in the relationship between regulators and the industry. The success of this tour will depend on how well the SEC incorporates the feedback from startups into future decisions.
