Dual registrant regulatory roundup - March 2025

Commissioner Peirce Announces Priorities for the SEC’s New Crypto Task Force

• On February 4, SEC Commissioner Peirce issued a statement announcing priorities for the SEC’s new Crypto Task Force. Commissioner Peirce’s statement, which began with a criticism of the SEC’s approach to the regulation of the cryptocurrency markets under former SEC Chair Gary Gensler, noted that SEC staff are “working hard to process applications for exemptive relief, requests for no-action letters, and registration statements.” 

• Commissioner Peirce’s statement sets forth several specific areas of focus for the Crypto Task Force, including: (1) examining the status of crypto assets under the securities laws, including identifying areas that fall outside the SEC’s jurisdiction; (2) exploring possible updates to the special-purpose broker-dealer statement issued by the SEC in December 2020; and (3) working with investment advisers to provide an appropriate regulatory framework within which advisers can safely, legally, and practically custody client assets themselves or with a third-party. 

• On February 21, SEC Commissioner Peirce issued another statement – this time seeking public input on a variety of issues related to crypto assets, including their classification, regulation, and the challenges faced by market participants. The statement poses 48 questions and identifies “statutes and rules that may present challenges to firms seeking to innovate with crypto assets and blockchain technology.” Commissioner Peirce invited public input on these questions and “creative solutions that comport with the Commission’s statutory framework.”

• Among other things, the statement asks a number of questions seeking input regarding how crypto assets can be custodied in a safe, legal, and practicable way. The statement specifically asks for input as to whether the SEC should “amend existing rules, propose new rules, or provide guidance to facilitate custody arrangements for crypto assets.” 

SEC Issues No-Action Relief from the Requirement to Report Certain Personally Identifiable Information to the Consolidated Audit Trail

• On February 10, the SEC announced that it had provided an exemption from the requirement to report certain personally identifiable information (PII) – names, addresses, and years of birth – to the Consolidated Audit Trail (CAT) for natural persons. The SEC’s press release announcing the exemption noted that it would “help mitigate potential security risks” caused by bad actors using PII to impersonate customers to access their accounts. 

SEC Announces New Cyber and Emerging Technologies Unit

• On February 20, the SEC announced the creation of the Cyber and Emerging Technologies Unit (CETU) to focus on combatting cyber related misconduct and to protect retail investors from bad actors in the emerging technologies space. The CETU is comprised of approximately 30 fraud specialists and attorneys across multiple SEC offices. The CETU replaced the Crypto Assets and Cyber Unit, which, as part of the SEC’s Division of Enforcement, had been responsible for handling enforcement actions related to crypto-related fraud. 

• The SEC announced that the CETU will focus on, among other things: (1) fraud committed using emerging technologies, such as artificial intelligence and machine learning; (2) use of social media to perpetrate fraud; (3) regulated entities’ compliance with cybersecurity rules and regulations; and (4) fraud involving blockchain technology and digital assets. 

SEC’s Division of Corporate Finance Issues a Statement on “Meme Coins”

• On February 27, the SEC’s Division of Corporate Finance issued a Staff Statement about “meme coins.” SEC Staff defined “meme coins,” as a “type of crypto asset inspired by internet memes, characters, current events, or trends in which the promoter seeks to attract an enthusiastic online community to purchase the meme coin and engage in its trading.” The Staff Statement further noted that “[m]eme coins are typically purchased for entertainment,” are “akin to collectibles,” and “typically have limited or no use or functionality.” 

• SEC Staff noted that transactions involving “meme coins” (as they are defined in the statement) do not constitute the offer and sale of securities under the federal securities laws because, among other reasons, they do not involve the investment in an enterprise and do not involve a reasonable expectation of profits derived from the efforts of others. As such, according to the Staff Statement, persons who participate in the offer and sale of “meme coins” do not need to register their transactions with the SEC under the Securities Act of 1933 or legally claim an applicable registration exemption, and “meme coin” purchasers are not protected by the federal securities laws. It is important to note, however, that the Staff Statement comes with the typical caveats that it represents the views of the SEC Staff and is not an official position of the SEC.