Nasdaq has urged the U.S. Securities and Exchange Commission (SEC) to adopt a clear-cut taxonomy for digital assets.
In a 23-page letter to the SEC, Nasdaq Chief Regulatory Officer John Zecca contended that current market mechanisms are more than able to handle crypto tokens once they are confined to neat, enumerated buckets. Still, there has to be a comprehensive taxonomy for digital assets.
As reported by CoinDesk, digital tokens should not become securities, at least until they are analogous to traditional instruments like stocks, bonds, or exchange-traded funds under existing law. Such instruments already fall under the SEC’s jurisdiction, said Zecca.
"While a stock by any other word would still be a stock, the existing market ecosystem can readily absorb digital assets by establishing the proper taxonomy and calibrating certain rules to reflect what is truly new and novel about digital assets," the letter stated in response to the invitation from the task force's chief, Commissioner Hester Peirce.
Tokens passing a strengthened Howey test by the Supreme Court would also be subject to SEC oversight as digital-asset investment contracts.
Zecca wrote that assets that fall under the U.S. legal definition of commodities should be regulated by the Commodity Futures Trading Commission. He says, "digital assets that constitute financial securities must trade as they do today."
The letter also suggested the introduction of a “crossover” trading status that would enable venues to manage multiple asset types in one place, taking advantage of combined surveillance, clearing, and depository services.
Zecca highlighted Nasdaq's trading, clearing, market monitoring, and central depository technology used around the world and urged regulators to adjust current rules instead of creating a whole new system, while also suggesting specific safety measures to ensure investor protections keep up with new developments.