This past Friday, the SEC reopened the comment period for proposed amendments to the definition of "exchange" under Exchange Act Rule 3b-16. The Commission's release also requests public comments and information on crypto asset securities and crypto trading systems more broadly. Specifically mentioned are DeFi trading systems - which may not come as a surprise after the SEC's subpoena of SushiSwap last month.
The reopening of the comment period came with a reminder from SEC Chair, Gary Gensler, "Make no mistake: many crypto trading platforms already come under the current definition of an exchange and thus have an existing duty to comply with the securities laws."
SEC Commissioner Hester Peirce, a major proponent of blockchain technology, issued a pointed dissent of the release where she highlights her concerns about the impacts of the SEC's enforcement of the crypto asset industry. Commissioner Peirce begins her dissent with a rebuke of the Commission's recent enforcement strategy regarding crypto assets, "Rather than embracing the promise of new technology as we have done in the past, here we propose to embrace stagnation, force centralization, urge expatriation, and welcome extinction of new technology."
Many crypto asset organizations are looking for regulatory clarity from the SEC, CFTC, and other U.S. regulators which many have said has been lacking to date. Those concerned worry that innovation in the blockchain industry will move outside of the U.S. in the current regulatory landscape, putting the U.S. at risk of falling behind in the crypto assets space.
It is unclear who will participate in this reopened comment period. Still, some industry participants are skeptical of the process (See Coinbase's March 22 Blog Post), and even Commissioner Pierce states in her dissent, "Today’s Commission treats the notice-and-comment rulemaking process not as a conversation, but as a threat."
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