In the continuity of its offensives against the cryptocurrency ecosystem, the SEC has reopened the debate on the possibility of applying the same requirements to decentralized exchanges (DEX) as for centralized platforms. However, disagreements were expressed internally.
DEXs are in the sights of the SEC
Last week, we raised questions that decentralized finance (DeFi) could become the next target for US regulators. As if to echo this, the Securities and Exchange Commission (SEC) has reopened a comment period to deal with the case of decentralized exchanges (DEX).
To be more precise, it would be amend the definition of exchange in Rule 3b-16 of the Securities Exchange Act of 1934, so as to integrate DEXs into this regulatory spectrum. A first comment period had already been opened on this subject last January:
“The Commission has received many comment letters on the January 2022 proposal which, among other things, requested information on the application of the existing rules and the application of the proposed amendments systems that trade crypto-asset securities and meet the proposed definition of systems exchange or trading that use distributed ledger or blockchain technology, including […] systems qualified as decentralized finance […]. »
Although nothing has been recorded to date, if such a scenario were to materialize, it would only increase the legal vagueness of the United States. In an extreme case, any DeFi protocol could then be accused of marketing unregistered securities on the pretext that Americans can access them. This could lead applications to block access to these usersas some launchpads already do to ensure their backs.
👉 To go further — Can SEC actions influence crypto regulation in Europe?
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Internal disagreements
Nevertheless, it seems that these discussions are not unanimous within the SEC. Indeed, Commissioner Hester Peirce, for example, clearly indicated her disagreement to Gary Gensler:
“Rather than embracing the promise of new technologies as we have done in the past, we propose here to embrace stagnation, force centralization, encourage expatriation and hail the extinction of new technologies. . Accordingly, I disagree. »
Later in his speech, we can even guess a reference to the recent threats sent to Coinbase. Indeed, Hester Peirce indicates that when entrepreneurs try to argue with the SEC the best way to adapt the legal framework so that they are in conformity, the institution “rather rewards their good faith with coercive action“.
Paul Grewal, the Chief Compliance Officer of Coinbase, has also welcomed the remarks of the Commissioner on Twitter :
In just 60-something words, SEC Commissioner @HesterPeirce has managed to articulate all that hits awfully close to home. Thank you. pic.twitter.com/8mZxkg16rH
— paulgrewal.eth (@iampaulgrewal) April 15, 2023
For his part, Warren Davidson, the representative of the 8th district of Ohio in the United States Congress, replied that he would introduce a bill to “to correct a long series of abuses“.
The purpose of such a project would be to remove Gary Gensler from his positionreplacing the role of chairman of the SEC with that of a director reporting to the commissioners:
Yup. To correct a long series of abuses, I am introducing legislation that removes the Chairman of the Securities and Exchange Commission and replaces the role with an Executive Director that reports to the Board (where authority resides). Former Chairs of the SEC are ineligible. https://t.co/VBnkgt8bhM
— Warren Davidson 🇺🇸 (@WarrenDavidson) April 16, 2023
If all this remains to this day at the stage of debate, these events do not accentuate the regulatory battle being played out in the United States since the start of the year.
👉 Also in the news — Terra case (UST): Did Do Kwon know the platform was going to collapse?
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Sources: SEC, Hester Peirce
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I timidly discovered the world of blockchain at the end of 2018 during my quest for financial freedom. Initially invested moderately, it was only two years later that I took the gamble of betting everything on the movement that was taking shape then. I then dedicate 2021 to training myself better to acquire more knowledge and seriousness. As I often like to say: I still have a billion things to learn. And what I do know, I want to share with you.
Vincent Mayor
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