The United States Securities and Exchange Commission (SEC) is trying to enforce exchanges in implementing it’s Consolidated Audit Trail (CAT) system due to which crypto regulation may be delayed. The agency has been working on pressurizing broker-dealers and exchanges to implement the CAT system. With all hands on deck, it is highly possible that crypto-related approvals may be delayed until things normalize.
The crypto markets have been waiting patiently for SEC to regulate blockchain-based security token offerings and related broker-dealers. However, the watchdog seemed to be eyeing a bigger fish. SEC is now working on revising the entire auditing system for traditional finance.
CAT’s primary purpose is to track orders through their entire cycles while also noting their handlers. This would give regulators accurate data about the activity of Eligible Securities across the United States.
CAT system: Why and When?
According to SEC chief Jay Clayton, the idea initially appeared back in 2010 during the Dow Jones flash crash. The stock market index dove by a thousand bounds and rebounded within a few minutes this created great concern as fluctuation at such a large-scale could prove disastrous.
The SEC and the Financial Industry Regulatory Authority (FINRA) have been trying to implement CAT ever since. The process seems to be taking a lot of time, and investors have been given a deadline of April 30, 2020. Parties that fail to comply will be penalized and/or lose the 25 percent of the fees they are entitled to receive while running CAT.
The CAT system will collectively cost over one hundred million dollars annually ($135M). The system will be funded by fees collected by various brokerages. Currently, “CAT consortium” consists of Nasdaq, the New York Stock Exchange, and Cboe Global Markets.
SEC crypto regulations
On the other hand, around forty blockchain-related broker-dealers are still waiting on the SEC for approval. The SEC – in a public statement – stated that the delays were because the established laws about Customer Protection Rule were not effective in the case of certain digital assets.
Regardless, the SEC is yet to announce anything about that. The CAT system’s implementation is putting stress on the SEC and is proceeding very slowly. Hence it can be said that those forty blockchain projects are not going to hear from the SEC anytime soon.
