SEC Discusses Transfer Agents and Tokenization, CFTC Addresses Agentic Finance, Prediction Markets and 24/7 Trading

SEC Chairman Paul Atkins delivered remarks focusing on revitalizing the public markets, establishing a workable framework for digital assets and restoring regulatory certainty through rulemaking. Director of the SEC’s Division of Trading and Markets Jamie Selway discussed the SEC's proposal to modernize the transfer agent rules and the Innovation Exemption. CFTC Chairman Michael Selig raised open questions about autonomous trading agents, and the CFTC announced it will host an industry roundtable on the viability of derivatives markets moving to 24/7 trading. The CFTC and the National Basketball Association (NBA) signed a memorandum of understanding (MOU) intended to protect the integrity of professional basketball in prediction markets. Prediction markets litigation continued in Louisiana, New York and Utah.

Regulatory Updates

SEC Chairman Atkins Delivers Remarks at the Economic Club of Dallas

• On Oct. 30, SEC Chairman Paul Atkins delivered remarks at the Economic Club of Dallas, focusing on three areas: revitalizing the public markets, establishing a workable framework for digital assets and restoring regulatory certainty through rulemaking.
• As to digital assets, Atkins stated that the SEC’s central objective is to adopt coherent rules establishing a “comprehensive, tailored securities offering regime” that addresses “long-standing barriers to responsible capital formation and innovation.”
• He referenced the proposed Regulation Crypto Assets, which would provide crypto developers and asset issuers the “first bespoke pathways” to raise capital in the U.S., and the recent Innovation Exemption, which he said opened the door to certain forms of onchain trading of tokenized securities within an appropriately regulated framework. He noted that “there is still more to come.”

SEC Trading and Markets Director Selway Delivers Remarks at Securities Transfer Association Conference

• On Oct. 29, Director of the SEC’s Division of Trading and Markets Jamie Selway delivered remarks at the Securities Transfer Association Annual Conference. He discussed the SEC’s proposal to modernize the transfer agent rules and invited comment, particularly “empirical data regarding costs and benefits.” He highlighted two questions raised by former Commissioner Peirce: Whether transfer agents should be allowed to use digital identifiers, such as an email or wallet address, instead of a name and physical address for tokenized securities; and how to tailor the rules to address inactivity standards in state escheatment laws.
• Selway pointed to the Innovation Exemption approved on Sept. 17 and said he expects some transfer agents to play a role in that framework. He also stated that the SEC’s rules “must be technologically neutral” and that what matters is that transfer agents meet their regulatory responsibilities, “not whether you do so on- or off-chain.”

CFTC Chairman Selig Addresses Agentic Finance at Inaugural Frontier Forum

• On Oct. 28, CFTC Chairman Selig delivered opening remarks at the CFTC Innovation Task Force’s inaugural Frontier Forum on Super Intelligence. He raised open questions about autonomous trading agents, including whether an agent’s developer becomes subject to registration, “[w]ho is liable if the agent goes rogue” and whether regulators need “a new flavor of know-your-customer, maybe KYA or know-your-agent.” He said the CFTC “benefits from already having confronted similar issues in crypto asset markets” and that its approach “must remain grounded in the functions performed, the control exercised, and the economic realities of the transaction.”

CFTC to Host Roundtable on 24/7 Trading

• On Oct. 28, the CFTC announced it will host an industry roundtable, open to the public, on Dec. 15 on the viability of derivatives markets moving to 24/7 trading, building on its request for comment from this summer. Topics include overnight trading, tokenization, infrastructure and staffing needs, and operational readiness.

CFTC and NBA Sign MOU to Protect Integrity in Professional Basketball

• On Oct. 26, the CFTC and the NBA signed an MOU intended to protect the integrity of professional basketball in prediction markets. Through the MOU, the CFTC and NBA will better share information by regularly communicating and discussing matters relating to integrity, as well as maintaining fair and transparent prediction markets. CFTC Chairman Selig stated that the MOU “continues the Commission’s commitment to increasing data sharing between the agency and professional sports leagues,” and that the “NBA joins the MLB and NHL in taking a responsible step toward protecting sports integrity and market participants from abuses in prediction markets like insider trading and fraud.”

Additional Updates

Prediction Markets Updates

• On Oct. 22, the New York State Gaming Commission filed a petition in the Supreme Court of the State of New York alleging that a prediction markets platform has refused to comply with subpoena requests necessary to assess the scope of its operations in New York. The Commission has asked the state court to compel the platform to comply with the subpoenas.
• On Oct. 23, a prediction markets platform filed a lawsuit in the U.S. District Court for the Western District of Louisiana against Louisiana officials, including the Governor, Attorney General, Gaming Control Board and the Louisiana State Police Gaming Enforcement Division. The platform seeks declaratory and injunctive relief to block threatened enforcement of the state’s gambling and sports-wagering laws, arguing they are preempted by the Commodity Exchange Act.
• On Oct. 27, the CFTC announced it has filed a lawsuit against Utah to block the state’s efforts to shut down CFTC-registered contract markets using state laws. The lawsuit follows Utah’s decision to file civil enforcement actions in state court against CFTC-regulated markets and other businesses. The action reflects the CFTC’s stance that it has exclusive jurisdiction over CFTC-registered prediction markets.
• On Oct. 28, Utah filed criminal charges in state court against a prediction markets platform and its co-founders under the state’s gambling laws. The charges are based on sports event contracts an undercover state agent traded on the platform in September, after a federal court ruled in August that federal law does not preempt Utah’s gambling laws