See More

SEC to Take Action Against DeFi Platforms

2 mins
Updated by Michael Washburn
Join our Trading Community on Telegram

In Brief

  • The SEC aims to modify a proposed rule to require digital-asset exchanges and DeFi platforms to register with the regulator.
  • The agency originally introduced the proposal in 2022 to address a "regulatory disparity."
  • DeFi may soon fall more directly under the SEC's purview.
  • promo

The regulators have DeFi in their scope as they look to rewrite the definition of an exchange.

The US Securities and Exchange Commission (SEC) plans to modify a proposed rule to state explicitly that digital-asset exchanges and decentralized finance, or DeFi, platforms must register with the regulator. The SEC has reopened the comment period for the pending rulemaking and has released supplemental information on proposed amendments to the definition of “exchange” under Exchange Act Rule 3b-16.

The public comment period will remain open for 30 days after publication of the reopening release in the Federal Register.

The SEC originally introduced the proposal in 2022 with a view to addressing a “regulatory disparity.” Many platforms that provide securities trading services have not registered as exchanges or brokers. The SEC, under chair Gary Gensler, wants to close that gap.

Last year, the crypto industry provided feedback to the SEC. The industry panned the proposal. Many accused it of lacking clarity and of crossing reasonable bounds in an effort to expand the regulator’s power.

The hostility of Gensler’s SEC toward cryptocurrencies often makes headlines. Announcements of new regulatory and enforcement actions and crackdowns are a regular occurrence. In recent weeks, the agency has battled San Francisco-based payment system Ripple in a high-profile lawsuit.

A Bad Day For DeFi

Gensler emphasized that many crypto trading platforms already fall under the current definition of an exchange. Therefore, they have a duty to comply with securities laws. He also argued that investors in the crypto markets must receive the same protections as those in other markets.

During an open commission meeting on Friday, SEC Commissioner Hester Peirce dissented from her colleagues. Peirce accused the Commission of taking a “cavalier approach” and a lack of interest in “promoting innovation and competition,” focusing instead on “protecting incumbents.” Peirce has become well-known in the industry for her pro-crypto stances at the SEC.

Observers widely view this move as a means of bringing decentralized finance, or “DeFi,” more firmly into the SEC’s purview. Gensler and his allies on the Commission believe the behavior matters, not the technology behind it.

The SEC has no plans to offer a precise definition of DeFi in the regulation. Rather, it will evaluate each scenario on a case-by-case basis.

You can view the proposed amendments here.

Top crypto projects in the US | July 2024
Harambe AI Harambe AI Explore
Uphold Uphold Explore
Coinbase Coinbase Explore
Chain GPT Chain GPT Explore
Top crypto projects in the US | July 2024
Harambe AI Harambe AI Explore
Uphold Uphold Explore
Coinbase Coinbase Explore
Chain GPT Chain GPT Explore
Top crypto projects in the US | July 2024

Trusted

Disclaimer

In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.

Frame-2298.png
Josh Adams
Josh is a reporter at BeInCrypto. He first worked as a journalist over a decade ago, initially covering music before moving into politics and current affairs. Josh first owned Bitcoin in 2014 and has followed the space ever since. He is particularly interested in Web3 adoption, policy and regulation, CBDCs, privacy, and the future of the metaverse.
READ FULL BIO
Sponsored
Sponsored