SEC to make proposals targeting DeFi cryptocurrency exchanges

• The U.S. Securities and Exchange Commission has voted to amend proposed rules for DeFi cryptocurrency exchanges.
• The rule was proposed by the regulator in January last year to ensure the registration of exchanges.
• The latest move has drawn criticism from industry insiders as well as SEC staff.

The SEC is taking on decentralized finance (decentralized finance) crypto space and its latest decision to reopen proposals from last year. The SEC launched a plan in January 2022 in an effort to address regulatory loopholes that allow platforms that purportedly offer securities trading but are not registered as brokers or exchanges with securities regulators.

SEC Commissioner Criticizes Agency’s Attempts to Target DeFi

according to a report Bloomberg, the revised proposal would strengthen the need for cryptocurrency exchanges and DeFi platforms to register with the SEC. The revised proposal reportedly contains language specifically intended to cover the digital assets and DeFi sectors, which the regulator considers to be within its purview. The decision to change the proposal was made at a meeting earlier today.

“Given the way crypto trading platforms operate, many of which are currently exchanges, regardless of the version of reopening we’re considering today,”

SEC Chairman Gary Gensler.

SEC Chairman Gary Gensler said before the meeting that the new proposal would be in the interest of investor protection. The new proposal would bring some DeFi platforms under the jurisdiction of securities regulators. However, SEC economist Jessica Wachter believes that many of the newly covered companies may attempt to obtain exemption under the ATS exemption. The 2022 proposal reopened after three of the five SEC commissioners voted in favor of the move.

Hester Peirce, one of five SEC commissioners, expressed disappointment at the regulator’s decision to change the proposal during the meeting. According to Pierce, the revised proposal would only serve large companies in traditional finance. She accused the regulator of being “not interested in promoting innovation and competition in financial markets”. The proposal will be open for public comment within 30 days of publication in the Federal Register. Public feedback will be incorporated into the final draft of the proposal, which will become effective upon majority approval by the committee.