SEC targets DeFi in vote to revisit proposal concerning the definition of 'exchange'

The United States Securities and Exchange Commission (SEC) has announced it volition beryllium revisiting the projected redefinition of an “exchange” nether the agency’s rules — a determination which could see crypto marketplace participants successful decentralized finance, oregon DeFi.

In an April 14 unfastened gathering with SEC commissioners and staff, seat Gary Gensler said the projected regularisation amendments could payment investors and markets by bringing definite brokers nether further regulatory scrutiny arsenic good arsenic “modernizing” rules which specify an exchange. Under the proposal, an “exchange” would beryllium much intimately defined arsenic a strategy that “bring[s] unneurotic buyers and sellers of securities done structured methods to negociate a trade” and explicitly see DeFi.

“This would relationship for the evolving quality and electronification of trading platforms successful the past 25 years,” said Gensler.

SEC seat Gary Gensler addressing commissioners successful an April 14 unfastened meeting. Source: SEC

The committee projected akin amendments successful January 2022, keeping the remark play for the nationalist unfastened until June. Some crypto advocacy groups criticized the SEC’s actions astatine the time, suggesting it was an overreach of the commission’s authorization which could jeopardize information successful the space.

Gensler added:

“Given however crypto trading platforms run today, galore of them presently are exchanges careless of this reopening merchandise we’re considering today. These platforms lucifer orders of aggregate buyers and sellers of crypto securities utilizing established non-discretionary methods. That’s the explanation of exchange, and today, astir crypto trading platforms conscionable it.”

SEC commissioner Hester Peirce, besides known arsenic 'Crypto Mom' for galore of her pro-crypto argumentation positions, raised concerns connected the rules regarding trading platforms that bash not grip tokens qualifying arsenic securities, oregon however to code operators that determination from securities to non-securities trading. She added determination was “so overmuch ambiguity” regarding the SEC’s existent attraction of securities.

“It’s imaginable that operating a strategy that uses these technologies to execute speech activities nether the projected rules successful a mode that complies with applicable regulations could importantly trim the grade to which the strategy is decentralized,” said Peirce. “Have we thought astir however forcing centralization would payment the American nationalist [...] It seems perverse to maine that we would beryllium encouraging centralization.”

Related: US SEC seeks to grow its Crypto Assets and Cyber Unit

Following the meeting, the SEC reiterated that DeFi projects fell nether the commission’s existent rules. The U.S. Treasury Department besides targeted DeFi services successful an April 6 informing regarding wealth laundering and violent financing. 

The nationalist remark play for the projected amendment volition beryllium unfastened for 30 pursuing work successful the Federal Register.

Magazine: Crypto Wendy connected trashing the SEC, sexism, and however underdogs tin win