– The SEC stated it will reopen an old proposal that expressly includes DeFi exchanges under its purview, drawing criticism from Commissioner Peirce.
– SEC Chairman Gensler has long argued that the vast majority of crypto assets are subject to securities laws.
The U.S. Securities and Exchange Commission (SEC) has announced it will reopen an old consumer protection law proposal. The proposal will be amended to explicitly include digital asset trading under its remit.
The plan is to regulate cryptocurrency exchanges, including decentralized financial (DeFi) exchanges.
The reopening of the old plan, according to the latest from the SEC press releasereiterates that existing laws related to stock exchanges also apply to digital asset trading platforms and so-called “DeFi” systems.
The original proposalcreated in January 2022, aimed to expand existing exchange legislation to include systems that “provide protocols to bring together buyers and sellers for trading any type of security.” These systems would be required to register as exchanges or broker-dealers and to follow the laws on alternative trading systems.
SEC Commissioner Pierce criticizes existing regulations
The proposal made no specific reference to crypto or DeFi. But the ambiguity of the terminology prompted concerns from pro-crypto SEC Commissioner Hester Peirce. The recently proposed revisions would cover crypto asset trading and DeFi exchanges.
The latest revisions are due, according to Commissioner Peirce
“Embrace stagnation, force centralization, push for displacement and welcome the extinction of new technology.”
Commissioner Peirce went on to say that adopting existing regulations for DeFi would lead to confusing and unworkable standards for network participants. This includes blockchain miners and validators that support the related protocols.
In addition, she questioned the ability of DeFi participants to meet exchange or broker-dealer registration standards and whether such registrations were necessary for DeFi.
SEC Chairman Gensler has long fought that the vast majority of crypto assets are subject to securities laws. In addition, cryptocurrency exchanges should be subject to the same rules and restrictions as regular trading platforms.
Peirce, on the other hand, regularly criticizes the chair for trying to fit a fresh and new industry into a rulebook not designed for it.