Securities and Exchange Commission published his Regulatory Agenda For next year, this marks a significant change from the previous administration.
Former SEC Chairman during Biden presidency Gary Gensler Much of the focus has been on policy goals such as ESG, as well as climate disclosure. Investor protection was another important issue, but unfortunately many of these issues forced issues such as innovation, access to capital and opportunity to take a backseat.
With the arrival of the current SEC Chairman Paul AtkinsThe Commission remains committed to its mission while supporting innovation that can benefit everyone. For example, previously digital assets fell under the regulation-by-enforcement model, but today the Commission is actually doing its job and following the new rules.
The entire SEC Regulatory Agenda available herealong with a few interesting items related to the online capital formation sector and the digital asset space.
Rule 144 It may be heading towards an update. According to the SEC, “The Department is considering re-propagating to the Commission an amendment to Rule 144, a non-exclusive safe harbor, that would permit the public resale of restricted or control securities if the rule conditions are met, to increase the circumstances in which the safe harbor may be available.”
This may mean that some private securities may become easier to sell. Maybe by shortening mandatory lockdown rules. This may impact Reg D issuances as well as Reg CF offerings.
CryptoAssets and SEC regulatory treatment It has been a focus since the beginning of the Trump administration. Rather than hoping to eliminate digital assets, the SEC is doing its part to clarify the treatment of them. The agenda item states the following: “The Department is considering recommending that the Commission propose rules on the offer and sale of crypto assets, potentially including certain exemptions and safe harbours, to help clarify the regulatory framework for crypto assets and provide greater certainty to the market.”
“Treatment”Emerging Growth Companies” was a big win for the JOBS Act, which also legalized online capital formation. The SEC aims to improve compliance for Emerging Growth companies while simplifying reporting. SEC, “To expand existing regulations for Emerging Growth Companies (generally defined to include new issuers with less than $1.235 billion in total annual gross revenue) and rationalize filing statuses to simplify the classification of registrants and reduce compliance burdens.”
Update of Exempt Bid Routes is another issue that can improve online capital formation. The move to ease the regulatory burden could help Reg D, Reg A+ and Reg CF issuers and the platforms that support them. Although details are thin, issues such as updating funding limits and improving investor access may reach this point.
Repeal of climate disclosure rules It’s a big deal for the SEC. The previous Commission sought to impose amorphous climate impact disclosure requirements on public companies that would impose an unknown cost on firms and their investors. This will also affect private firms in the subsector that work with reporting companies. It ended up being a complete cluster where you know what it is. Stupid and naive behavior from start to finish would have diminished public markets.
Increasing retail’s access to private markets is another important rulemaking and policy issue. Small investors have long faced discrimination in accessing private securities markets. As everyone knows, promising young companies stay private for as long as possible because of the burden of over-regulation and the availability of an ocean of money willing to invest before the companies go public. This simple fact has led to greater wealth inequality, with the masses losing and the rich gaining. This is an issue that should have been addressed years ago. The potential change aims to allow access to: “Creating private markets through registered investment companies and allowing investment advisors to charge performance fees to a broader range of clients.”
subject finders It was a problem that had been going on for years and was something that the SEC had failed to resolve. It makes sense to allow individuals to connect investors with companies in need of capital. But if you do this today and you are not registered with the SEC, you are breaking the law. Finders need clarified rules to support access to capital because this will help the underserved the most.
There are other issues on the agenda that will improve capital markets if they are successfully updated.
In announcing the regulatory agenda, Mayor Atkins said:
“This Commission recognizes the importance of evolving our regulatory framework to reflect the realities of today’s operating environment—embracing innovation and new technology. To achieve President Trump’s goal of ensuring the United States becomes the crypto capital of the world, we are embracing innovation to bring more products onshore, creating clear rules for raising capital with crypto assets, and providing clarity on how market participants can store and facilitate on-chain trading of tokenized securities. All while ensuring strong investor protection guardrails are in place and “We continue to pursue bad actors who violate the law.”
He added that it was vital to “reverse the decline of publicly traded companies and revitalize our public markets” and that “both the public and private sectors should not be reserved for wealthy insiders.” It’s time.
