The other speaker, attorney Lilya Tessler, head of Sidley Austin LLP's FinTech and Blockchain Group, said that a lot of the regulatory difficulty comes from the SEC's messaging since 2017 that many digital assets count as investment contracts and so must be issued pursuant to Regulation D, and that secondary trading needs to be done through a registered broker-dealer. But she said many broker-dealers lack the authorization to work with such assets in the first place, which is why a lot of them are currently working to get certain definitions changed so they can. 

"The broker-dealers [include] those trying to act as private placement brokers to match issuers with investors in this space seeking to purchase securities tokens," she said. "There are those brokers seeking to just get permission to trade digital assets from a secondary trading perspective; [there are] some seeking approval to be a clearing or custody broker to solve some of the custody issues; [and there are] some just wanting to operate alternative trading systems to trade these. So there's a number of regulatory issues stemming from that."

Tessler said that broker-dealers in digital assets are also having difficulty with regulations of the Financial Industry Regulatory Authority (FINRA). She said it's unclear how FINRA rules apply to digital asset securities because they don't trade through the DTCC and so therefore there's no custodian; she noted, too, that it's unclear how regulation 15c3-1, which governs net capital requirements, is applied to digital assets.