- Sui’s developer, Mysten Labs, attended a meeting hosted by the SEC Crypto Task Force on September 9.
- The team behind the SUI token reiterated the recommendations it set forth via a letter to the regulator in May.
In February, the US Securities and Exchange Commission (SEC) sought the public’s input on the subject of classification of digital assets. Mysten Labs, the team behind Sui (SUI), was among the key stakeholders in the cryptocurrency industry who responded to the regulator’s request via a letter in May.
On Tuesday, the SEC reportedly met with Mysten Labs to further discuss the regulatory challenges gripping the crypto industry. Additionally, they tackled how the joint effort of the government and key stakeholders in the industry could solve these underlying issues.
The parties have yet to release an official statement about what transpired during the closed meeting. However, sources familiar with the matter who wished to keep their anonymity offered insights on their agenda.
Mysten Labs Advocates a “Utility First” Approach in Crypto Regulation
The conversation reportedly centered on Mysten Labs’ formal submission to the SEC’s earlier request for public input on crypto asset classification. The company has been a vocal proponent of a “utility-first” approach to regulation, arguing that a digital asset’s primary function and real-world use case should be the determining factor in whether it is classified as a security.
Mysten Labs is apparently moving the conversation beyond the traditional Howey Test in determining if a digital asset transaction is a security, pointing out that not all digital assets are created for speculative investment. Sui is a good example to back this claim because its use case is not limited to speculative investing. Its primary utility also includes applications in decentralized finance (DeFi), gaming, supply chain management, and supporting high-performance, security-demanding, and high-volume tasks.
Why the Meeting Matters?
The meeting is a positive sign for the crypto industry, which has long criticized the SEC’s “regulation by enforcement” approach. The fact that the Crypto Task Force met with a key player like Mysten Labs, known for its focus on a technically distinct blockchain and its push for institutional adoption, suggests a genuine effort to understand the intricacies of the technology.
The sources said the discussions also revolved around the challenges of applying existing securities laws to a rapidly evolving technology. They didn’t elaborate on this particular subject, but it may tie up with regulatory uncertainties holding back institutional adoption, such as the SEC’s recent postponement of its decision on the pending 21Shares SUI exchange-traded fund (ETF). Moreover, Mysten Labs presented a case for a clearer, “fit-for-purpose” regulatory framework that would provide a path to compliance for projects with genuine utility.
While the meeting is a step in the right direction, it’s far from a definitive resolution. The SEC’s Crypto Task Force has a stated goal of providing “a rational regulatory framework,” but the timeline for such a framework remains unclear. The crypto community will be watching closely for any more announcements from the agency, which has also been holding a series of public roundtables as part of its “Spring Sprint Toward Crypto Clarity” initiative.
For now, the meeting serves as a hopeful signal that the regulator is at least listening to the industry it seeks to govern.
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