The SEC’s five-year time frame provides an opportunity to work on what he calls the “mechanics” of the latest technology. In addition to launching the pilot project, the agency is seeking feedback to answer these questions.

Yellen’s warning

Treasury Secretary Janet L. Yellen told the Senate Finance Committee during her confirmation hearing on Jan. 19 that cryptocurrencies are a particular concern because “many are used, at least in a transactions sense, mainly for illicit financing. … And I think we really need to examine ways in which we can curtail their use and make sure that … money laundering doesn’t occur through those channels.”

Nevertheless, Lilya Tessler, a partner with Sidley Austin LLP, said she expects brokers to allow customers to be able to buy and sell securities with payment in any form — whether with Bitcoin or other cryptocurrency, such as a stablecoin, which is a digital asset tied to a traditional monetary one like the dollar. 

“I believe that is on the horizon,” Tessler told CQ Roll Call. Brokers might have to work with third parties that can facilitate transactions in nonsecurity digital assets, she said.

Jorge Pesok, a lawyer in Crowell & Moring LLP’s blockchain and digital assets practice, noted the challenges: the volatile price of cyptocurrencies like Bitcoin, which makes them risky to accept as payment, and the difference in how digital currencies are stored compared with shares of stock or cash deposits for customers.

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