Reports indicate that the new SEC leadership is considering abolishing the Consolidated Audit Trail (CAT) due to high costs and infringement on investor privacy.
Core Reasons Behind CAT Abolition
The CAT system incurs significant annual costs approaching $250 million, growing at a rate of 10-15% annually. Major expenses include infrastructure, data storage, data processing, and regulatory compliance.
Potential Disruptions to Traditional Financial Markets
The abolishment of CAT could hinder regulators' ability to track and prevent market misconduct. This may lead to decreased transparency and increased risk of manipulation in financial markets.
Impact on the Crypto Industry
The abolition of the CAT system may symbolize a regulatory pullback and increased focus on privacy within the crypto markets. However, this does not imply the end of regulation entirely, as regulators may strengthen identification requirements for users on centralized exchanges.
The potential abolishment of the CAT system could lead to changes in regulation for both traditional and crypto markets, possibly facilitating more adaptive approaches.
