On January 26, the United States Securities and Exchange Commission proposed amendments to Rule 3b-16 under the Exchange Act that does not mention digital assets or decentralized finance, which could negatively affect platforms that facilitate transactions. cryptocurrency transactions. Some crypto advocates — including SEC Commissioner Hester Peirce — believe the commission’s expanded definition of an exchange could push an entire class of cryptocurrency entities under the regulator’s jurisdiction, subjecting them to additional registration and reporting burdens. . How real is the threat?
The proposed change The regulator’s proposed changes drastically broaden the definition of an exchange, while removing the exemption for systems that merely connect buyers and sellers of securities without offering order execution facilities. , which are not currently required to register as an Alternative Trading System, a class of trading platform within the purview of the SEC. Additionally, the proposed rule includes “communication protocol systems” within the scope of the term “exchange.”
What it means in practice is that the SEC is claiming regulatory territory over a wide range of platforms that previously operated outside its jurisdiction. One point of particular concern is that decentralized financial protocols could well fit the definition of systems of communication protocols that bring “buyers and sellers of securities together using commercial interest.” The commission, as is well known by now, is in favor of characterizing most digital assets as securities.
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