The House Financial Services Committee asked the Government Accountability Office (GAO) to review the Security and Exchange Commission’s (SEC’s) engagement with fintech. Plus, it requested a report on the SEC’s competency in crypto-assets. The GAO made some benign procedural recommendations that the SEC agreed with. While the findings were innocuous, there are a few interesting takeaways in the paper.
The GAO gives examples of crypto-assets distinguishing between cryptocurrencies and crypto-asset security tokens. It defines the latter as representing ownership rights and is the digital form of conventional securities such as stocks and bonds.
That definition of crypto-asset securities contrasts with the SEC’s broader definition, including most cryptocurrencies. The report notes that the “SEC Chair has stated his view (our emphasis) in speeches that most crypto assets are securities because they are investment contracts under the Howey test.” Perhaps we’re reading between the tea leaves, but the GAO appears to disagree with the SEC’s definition without addressing the topic directly.
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