How The US Could Lose Its Grip On Crypto

AIMA's response to the SEC Crypto Task Force urges clarity, fairness, and innovation to avoid the US falling behind

The US digital assets industry faces a fork in the road, with the US risking falling behind other jurisdictions such as Singapore, Hong Kong, and the UAE and losing its status as a financial innovation leader if it does not establish a more predictable and coherent regulatory framework.

Read hedge fund letters here

This week, we will be filing our response to the SEC's newly launched Crypto Task Force, setting out our position on the future of crypto regulation in the US. Addressing the key questions raised by its chief, Commissioner Hester Peirce, in her recent speech, the response outlines industry concerns over regulatory uncertainty, inconsistent enforcement, and the need for a balanced approach that fosters innovation while ensuring investor protection.

This filing marks our first crypto-related regulatory submission to the SEC under the new Trump Administration—an administration that will define the trajectory of digital assets over the next four years.

Key points from the response include:

1) Regulatory uncertainty is stifling institutional investment

• Our annual crypto hedge fund report found that regulatory uncertainty remains the primary deterrent to institutional investment in crypto, with 76% of managers not yet invested in digital assets indicating a reluctance to enter the space due to ongoing regulatory uncertainty. While jurisdictions like the EU, Singapore, and the UAE have moved towards more precise frameworks, the US continues relying on inconsistent enforcement, pushing investment offshore.

2) Institutional custody requires a regulatory make-over

• While custodial solutions evolve, the regulatory framework does not match blockchain realities and market dynamics. We strongly urge the SEC to withdraw the 2023 Safeguarding Rule Proposal, which imposes unworkable burdens on custodians and investors without clear benefits.

Get in touch for a direct copy of our response once it has been filed.

The European investment strategy is coming this Wednesday!

On Wednesday, the European Commission will unveil its Savings & Investments Union (SIU) Strategy, a crucial initiative aimed at enhancing the EU’s economic competitiveness and achieve its broader objectives of innovation, green transition and security.

The SIU could unlock deeper capital pools, increase investment opportunities, and strengthen Europe’s financial ecosystem—with hedge funds and private credit playing a pivotal role.

We have long championed this effort, advocating for capital market growth, regulatory simplification, and improved access to financing.

Upon publication of the strategy, we will be reacting. As always, do get in contact to learn more.

Form PF: Measure twice, cut once

We are calling for the SEC and CFTC to indefinitely suspend its expansion of Form PF to allow for a clear-eyed assessment of the changes' benefits and alignment with similar changes being made in the UK and the EU.

The SEC and CFTC keep adding more granular and complex reporting requirements without clear evidence that these changes effectively improve risk monitoring.

In a letter to the regulators, we warn that this approach creates excessive costs, operational burdens, and regulatory uncertainty for fund managers while failing to achieve the stated goal of better identifying systemic financial risks.

This continuous expansion lacks a clear purpose, imposes unjustifiable compliance costs, and risks making Form PF an ineffective regulatory tool.

Instead of simply building on Form PF further, the SEC and CFTC should suspend any new changes.

We're not calling for the SEC to consider ending Form PF, especially given its critical purpose. However, a review of its current structure can't hurt, especially if further Form PF changes are not going to help identify financial risks.

The scoop from AIMA’s Global Policy and Regulatory Forum

Last week, we brought the world’s top policymakers, regulators, and industry leaders together in New York to address the legal and regulatory shifts shaping 2025.

The Global Policy and Regulatory Forum follows a pivotal period for us, where we successfully challenged the US SEC’s overreaching rulemaking agenda in court—securing two legal victories to safeguard our members from undue harm, with a third ruling still pending.

Speakers at the event included SEC Commissioner Hester Peirce, CFTC Commissioner Summer Mersinger, IOSCO Secretary General Rodrigo Buenaventura, and the Director of Financial Stability at the Bank of England Lee Foulger.

Key themes addressed at the forum include:

1. The need to slow the pace and complexity of new regulation is a common refrain across the US, EU and UK. But, it's not a given that the work of individual regulatory authorities will live up to the political rhetoric. The implications for work in progress are also less clear.
2. Liquidity and leverage remain in the spotlight, although regulators recognise that there is no 'one-size-fits-all' approach and that the available supervisory tools must be used sensitively. The potential value of system-wide stress testing will continue to be a focus globally.
3. The shape of the framework applicable to digital assets is becoming clearer, but regulating a market that is not defined by geographical borders is throwing up complex challenges relating to extraterritoriality. This issue has plagued the broader global regulatory dialogue in the past decade. Even within the US, the respective roles and responsibilities of the SEC and CFTC have yet to be settled.
4. The impressive growth in private market strategies remains a key area of interest to policymakers globally. The conversation has become more nuanced, moving away from the talk of asset managers encroaching on the role of banks to better understand the interdependencies of the banking and private credit sectors and the scope for more effective partnerships. The trend of insurers increasing their exposures to the private credit world is also noteworthy. It could be accelerated if reforms to securitisation rules deliver greater scope for credit transformation.
5. We are entering a very different era in terms of sustainability-focused regulation, with rolling back of disclosure obligations for asset managers. However, the extreme polarisation of views on sustainable finance between the EU and the US will be challenging for firms to navigate.
6. Litigation has played an important role in checking the actions of regulators, notably the US SEC, and ensuring that its rulemaking respects its legislative mandate. Concern persists, however, that ongoing enforcement by the Agency could continue to create a precedent that unduly expands its authority.
7. Asset managers remain keenly interested in understanding how to access and operate in different markets. The event shone a light on some of the practicalities for US firms looking to expand their footprint globally.

The UK FCA has dropped its 'Name and Shame' proposal

As the world’s largest alternative investment trade association, we have consistently offered constructive options for improving the FCA's 'Name and Shame' proposal—including significantly narrowing the circumstances where firms/individuals would be named—while underscoring the serious risk of undue reputational damage to firms, individuals, and investors that the proposal posed in its format.

At the time, AIMA CEO Jack Inglis commented on the FCA's announcement: “We welcome this announcement from the FCA, which comes after extensive engagement with the industry and a critical report from the House of Lords Financial Service Regulation Committee. It shows they have accepted the serious concerns that have been widely expressed, including those of AIMA members. The original proposals would have placed the UK at a competitive disadvantage to its international peers and we are pleased that FCA has understood and that firms now have greater confidence that their businesses will not be compromised by unwarranted “naming and shaming” if ever subject to an investigation.”

About AIMA:

The Alternative Investment Management Association (AIMA) is the global representative of the alternative investment industry, with around 2,100 corporate members in over 60 countries. AIMA's fund manager members collectively manage more than US$3 trillion in hedge fund and private credit assets.