Nasdaq is calling on the US Securities and Exchange Commission (SEC) to establish a clear classification system for digital assets. In a detailed 23-page response to an SEC request for input, Nasdaq Chief Regulatory Officer John Zecca laid out a proposed four-part taxonomy aimed at clarifying how digital assets should be regulated.
According to the letter, existing market infrastructure is capable of accommodating digital tokens, but a lack of regulatory clarity continues to hinder progress. Zecca stressed that digital assets should only be treated as securities when they function like traditional financial instruments, such as stocks, bonds, or ETFs, already under SEC oversight.
He pointed out that tokens meeting the criteria of the Supreme Court’s Howey test could be treated as investment contracts, thus falling under the SEC’s jurisdiction. However, assets that qualify as commodities under US law, Zecca argued, should be overseen by the Commodity Futures Trading Commission (CFTC).
Crossover
The letter also introduced the idea of a “crossover” trading category, which would allow venues to handle multiple asset types under one regulatory framework. This could streamline surveillance, clearing, and custody by consolidating them across asset classes.
Rather than proposing an overhaul of the current market structure, Nasdaq advocated for adapting existing rules to accommodate digital innovations. Zecca emphasised the importance of aligning regulatory changes with the realities of digital asset trading, drawing on Nasdaq’s experience in technology for trading, clearing, market surveillance, and central securities depositories.
Taskforce
The response was submitted to SEC Commissioner Hester Peirce’s digital asset task force, which is exploring ways to modernise regulation in light of rapid developments in the crypto space.
