The United States House of Representatives Committee on Financial Services has issued a memorandum revealing that the government entity will hold a hearing on Tuesday, September 24, 2019, dubbed the “Oversight of the Securities and Exchange Commission: Wall Street’s Cop on the Beat” with cryptocurrencies as part of the agenda.
With a reference to the guidance issued this April on applying the “Howey test” to digital assets, the memorandum states that during the hearing agencies plan to touch upon ETFs and Facebook-led Libra regulations among other crypto topics.
Concerning the Facebook-led Libra, the committee maintains that “the Libra Investment Token could be classified as security since it is intended to be sold to investors to fund startup costs and would provide them with dividends”:
“The Libra token itself may also be a security, but Facebook does not intend to pay dividends and it is unclear if investors would have a ‘reasonable expectation of profits.’ However, the offer of Libra could be integrated into the offering of the Libra Investment Token, thereby deeming both securities.”
Moreover, the argument goes that “Like ETFs, Libra would be redeemable by certain authorized resellers and bought and sold in the open market.”
In the abstract on ETFs, which are defined as “a type of investment company, which can be redeemed by the fund like mutual funds, but also allow investors to trade throughout the day on an exchange at market prices,” the memorandum reads:
“If an asset is an investment company and not exempt from registration, it must comply with regulations designed to minimize conflicts of interest, including regular disclosure of their financial condition and investment policies to investors.”
The one-panel hearing will be held with 5 commissioners from the SEC: Chairman Jay Clayton along with Robert J. Jackson Jr., Hester M. Peirce, Elad L. Roisman and Allison Herren Lee.