Davis Polk partner and Financial Institutions practice head Margaret Tahyar and partner and ESG practice head Joe Hall discussed digital asset regulation in Europe and the U.S. with IFLR. Margaret noted that “while Europe has created MICA [Markets in Crypto-Assets] and has put in place a regulatory perimeter, we have been engaged in relatively useless battles about whether digital assets should be considered securities or commodities.” She added that “all we really need to be saying is, this is a new asset class and it’s not possible to prohibit it, so let’s focus on creating an appropriate regulatory framework.”

Joe explained that congressional intervention is likely. “Congress may take on the broader question of digital asset regulation and clarify jurisdictional lines between the SEC, the CFTC, and the banking regulators. Adopting this kind of legislation, however, will be difficult to navigate politically.”

SEC vs. CFTC: how FTX changed the crypto game,” IFLR (February 16, 2023) (subscription required)