SEC Applies Standard Rules to Trump's DeFi Project

In Brief:

SEC Commissioner Mark Uyeda clarified that Trump's DeFi project, World Liberty Financial, will face the same disclosure and transparency requirements as other US crypto firms.

Despite Trump's involvement, the SEC will not evaluate the project's merits, focusing instead on ensuring compliance with existing regulations.

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SEC Applies Standard Rules to Trump's DeFi Project

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Former President Donald Trump's DeFi initiative, World Liberty Financial, will not be exempt from the stringent regulations applied to US-based crypto ventures, according to SEC Commissioner Mark Uyeda. In an upcoming interview with Fox Business, Uyeda emphasized that the project must adhere to the same disclosure and transparency standards as any other crypto-related firm in the United States.

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Disclosure, Not Merit, Is the Focus

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Uyeda made it clear that the SEC acts as a disclosure regulator, not a merit regulator. This means the commission will not assess the intrinsic value or risks associated with Trump's project. Instead, the focus will be on ensuring proper disclosure and compliance with regulatory requirements.

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Amid speculation that political motivations might influence regulatory actions, Uyeda stressed the importance of maintaining impartiality. He advised Trump's legal team to prepare for the regulatory challenges that come with navigating the complex and often opaque crypto regulatory landscape.

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Challenges in the Regulatory Environment

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The SEC's approach to regulating the crypto industry has been a point of contention, with many in the sector expressing frustration over the lack of clear guidance. Uyeda himself has criticized this ambiguity, warning that it could drive innovation overseas. He reiterated that the SEC's role is to ensure proper disclosure, not to determine the value of specific projects.

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Hester Peirce, another SEC commissioner, has echoed these concerns, describing the current regulatory environment as "toxic" and cautioning that it could stifle innovation in the US crypto market. There is a growing push among lawmakers for more transparent regulation, with some advocating for a joint advisory body to establish a clearer framework for the sector.

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World Liberty Financial has faced skepticism from investors, questioning its potential success amid regulatory challenges. Trump has claimed that the project will position the US as a leader in the global crypto market, but its success may depend on whether regulatory bodies can provide clearer guidance in the near future.

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