SEC targets DeFi in vote to revisit proposal concerning the definition of ‘exchange’
The United States Securities and Exchange Commission has announced it will be revisiting the proposed redefinition of an “exchange” under the agency’s rules — a move that could include crypto market participants in decentralized finance, or DeFi.
In an April 14 open meeting with SEC commissioners and staff, SEC Chair Gary Gensler said the proposed rule amendments could benefit investors and markets by bringing certain brokers under additional regulatory scrutiny as well as “modernizing” rules that define an exchange. Under the proposal, an “exchange” would be more closely defined as a system that “bring[s] together buyers and sellers of securities through structured methods to negotiate a trade” and explicitly include DeFi.
“This would account for the evolving nature and electronification of trading platforms in the last 25 years,” said Gensler.
The commission proposed similar amendments in January 2022, keeping the comment period for the public open until June. Some crypto advocacy groups criticized the SEC’s actions at the time, suggesting it was an overreach of the commission’s authority that could jeopardize participation in the space.
Gensler added:
SEC Commissioner Hester Peirce, also known as “Crypto Mom” by many of her pro-crypto policy positions, raised concerns about the rules regarding trading platforms that do not handle tokens qualifying as securities, or how to address operators that move from securities to non-securities trading. She added there was “so much ambiguity” regarding the SEC’s current treatment of securities.
“It’s possible that operating a system that uses these technologies to perform exchange activities under the proposed rules in a manner that complies with applicable regulations could
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