USA: a Step Closer to Proper Digital Asset Regulations
A wave of enhanced and nuanced regulations of digital asset transactions that swept the world recently did not miss the United States. According to the new letter issued by the US Securities and Exchange Commissions on September 25th, the process of broker-dealer operated digital asset securities will become far less lengthy and complex and far more secure.
What Was It Like Before?
Prior to the introduction of the new no-action letter, the process of operating such transactions was both difficult, multi-stage and, often subjected to security risks and penalties. Here is a breakdown of what it used to look like:
- Within the Alternative Trading System (ATS) to launch an operation the parties involved first had to submit their orders to the system.
- The system processes the order and finds an appropriate match.
- Both parties are then made aware of the match that the system has found.
- Finally, the transaction is carried out between the parties themselves or the custodians of the asset.
One Small Step Closer To Regulated Digital Space
Having assessed the aforementioned, and, largely outdated, code of conduct, the US regulatory came up with what seems to be small, at first sight, but is actually quite a major development in the grand scheme of things.
The newly introduced SEC no-action letter will reduce the process described above to only three stages, and here is how:
- As per usual, both parties will have to submit their orders to the ATS, however, as of now, they will have to make their custodians aware of the fact that the order has been submitted and that they are not required to carry out and complete the transaction.
- The system will find an appropriate match.
- Both the parties involved and the custodians are made aware of the match that has been found by the system. In turn, custodians will have to step in and carry out the transaction.
About the author
Upon Receiving her BA HONS in International Relations and MSc in Defense, Development and Diplomacy at Durham University, Veronika Malinboym has worked as a news producer for RT International News Channel.
Image courtesy of Nasdaq
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