U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce has issued an opinion regarding the Commission’s recent attempt to change the definition of “exchange” in the Exchange Act rules. According to Peirce, the agency is currently expanding its scope to solve a “non-existent problem” and stifling innovation in the process.
SEC Commissioner Hester Peirce issued a dissenting opinion
U.S. SEC Commissioner Hester Peirce, also known as the “crypto mom” in the cryptocurrency world, has written a letter condemning the Commission’s recent decision to amend the definition of “exchange” in the Exchange Act rules Peirce says that this decision, rather than enhancing innovation, will “nothing” and will cause further disruption in the U.S. cryptocurrency community, he said
Peirce argued that the SEC today uses the rulemaking process as a threat compared to the SEC of the 1990s, which acted in a different manner. She commented that,:
The Commission today tells entrepreneurs who want to do something new in our markets to come and register. When entrepreneurs find that they cannot register, the Commission denies them the possibility of making practical adjustments to the registration framework to help them register, and instead rewards their good faith with enforcement action.
Two U.S.-based crypto exchanges – Kraken, which has already settled with the agency, and Coinbase, which received Wells’ notice – have complained about this course of action on the part of the SEC.
Peirce also addressed the lack of detail regarding the applicability of these new standards to defi structures, commenting that compliance for these platforms is not even considered possible.
SEC Decision
The dissent stems from a directive to introduce supplemental information to the definition of “exchange” in the Exchange Act rules to clarify which cryptocurrency structures fall under the agency’s umbrella.
The proposed amendment covers defi platforms and how they can be regulated under this new proposal, SEC Chairman Gary Gensler clarified that many of these platforms are already covered by existing rules. He stated that,:
Many crypto trading platforms already fall under the current definition of an exchange and therefore have existing obligations to comply with securities laws. Investors in the crypto market must receive the same time-tested and established protections that securities laws provide in all other markets.
Commenters have 30 days to present their ideas and questions to the agency for discussion and possible application to the amendments.
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