The US Securities and Exchange Commission on Friday altered a proposed rule to make more explicit that digital-asset exchanges and decentralized-finance platforms must register with the regulator.
(Bloomberg) — The US Securities and Exchange Commission on Friday altered a proposed rule to make more explicit that digital-asset exchanges and decentralized-finance platforms must register with the regulator.
The SEC’s plan, which was first proposed in 2022, is meant to close a regulatory gap created by platforms that offer trading in securities but don’t register as exchanges or brokerages. The agency’s revised plan adds language specific to digital assets, many of which the regulator says fall under its purview.
Even though the SEC’s original proposal didn’t mention crypto, it was widely seen as applicable to digital assets. That ambiguity led to a barrage of criticism from crypto firms including Coinbase Global Inc. and Circle Internet Financial, as well as one of the agency’s own commissioners.
“Given how crypto trading platforms operate, many of them currently are exchanges, regardless of the reopening release we’re considering today,” SEC Chair Gary Gensler said in a statement before a meeting to vote to reopen the plan for public comment on Friday. “Investors in the crypto markets must receive the same time-tested protections that the securities laws provide in all other markets.”
The SEC says the re-upped proposal would capture an additional small number of digital asset firms, about a dozen, whose platforms use certain communication protocols to match buyers and sellers. Many of the newly-covered platforms under the proposal would likely seek an exemption from the rules under the Alternative Trading System exemption, SEC top economist Jessica Wachter said during the Friday meeting.
The agency says that its current rules already cover larger exchanges that trade tokens the SEC deems to be securities.
Hester Peirce, one of the SEC’s two Republican commissioners, said during a Friday meeting that the proposal would only serve to protect incumbent players and described the agency as “uninterested in facilitating innovation and competition in the financial markets.”
The five-member commission approved the re-opening of the proposal by a 3-2 vote along party lines. The SEC will take comment for 30 days after the reopening notice is published in the Federal Register before incorporating the public feedback into a final version of the proposal. That version, in turn, must also be approved by a majority of the commission.
–With assistance from Allyson Versprille.
(Updates with details on SEC vote in first and last paragraphs, commissioner comment in seventh paragraph.)
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