US SEC Reopens Comment Period For Rule Change On DeFi Platforms

• The SEC plans to clarify that digital asset exchanges and DeFi platforms must register with the regulator.
• The comment period for the proposed rule has been reopened and will remain open for 30 days.
• Chair Gary Gensler aims to close the regulatory gap by requiring many securities trading platforms to register.

The US Securities and Exchange Commission (SEC) intends to revise a proposed regulation to clarify that digital asset exchanges and DeFi platforms must register with the regulator. The SEC has reopened the comment period and issued additional details on modifications to the definition of “exchange” under Exchange Act Rule 3b-16.

After releasing supplemental information on proposed amendments, the SEC has reopened the comment period for the pending rulemaking, which will remain open for 30 days after the publication of the reopening release in the Federal Register.

In 2022, the SEC proposed a rule to address a “regulatory disparity” where many securities trading platforms are not registered. The agency, led by Chair Gary Gensler, aims to close this gap with the proposed rule.

In the past year, the crypto industry provided feedback to the SEC, panning the proposal for lacking clarity and expanding the regulator’s power unreasonably.

The SEC’s tough stance on cryptocurrencies, led by Gary Gensler, has received media attention. Additionally, the agency has been actively pursuing regulatory and enforcement actions against crypto, including a lawsuit against Ripple.

Moreover, Gensler stressed that existing crypto trading platforms could be categorized as exchanges under current regulations, and must comply with securities laws. He also stated that investors in the crypto market deserve the same level of protection as traditional markets.

At a recent SEC meeting, Commissioner Hester Peirce dissented from her colleagues and accused the Commission of prioritizing “protecting incumbents” over “promoting innovation and competition.” Peirce is known for her pro-crypto stance.