The US SEC Wants Public Input On Decentralised Crypto Exchanges
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Finance regulator targets decentralized finance to ease regulation of crypto firms' operations
After crypto firms criticized the plan as vague and aimed at attracting decentralized finance platforms, or DeFi platforms, that would otherwise not be subject to the regulator's oversight. Users of DeFi-platforms are able to lend, borrow, and save in digital assets without having to go through traditional financial gatekeepers like banks and exchanges. The plan would expand the definition of an exchange to include platforms that use "communication protocols" such as request-for-quote systems. If the change is implemented, it is anticipated that, in addition to traditional exchanges, which aggregate orders from multiple buyers and sellers in a market, it will cover a great deal more venues for regulation.
In any case, SEC is looking to redefine crypto brokers as exchanges
The proposition was focused on Treasury markets and marketplaces for other government securities, where inter-dealer crypto brokers have functioned like exchanges without registering them as such. In any case, crypto firms pushed back on the arrangement in the midst of developing strains with the regulator. Numerous in the business have said existing protection guidelines are unseemly and the area needs new standards. According to SEC officials, some DeFi platforms may fall under the proposed definition, while others may already be exchanges under the existing definition.
Most crypto trading platforms meet SEC's decentralized business standards: Gensler
Most crypto trading platforms meet that definition, whether or not they call themselves decentralized, Gensler said. Normally, the commission would choose in the background if expanding a public remark period is fundamental. The gathering highlighted the philosophical split between the commissioners, with both Republican commissioners dissenting.
According to Nicholas Losurdo, a partner at Goodwin and former counsel to former SEC Commissioner Elad Roisman, the move on Friday provided "very few answers" and likely raised additional questions for the sector, despite the fact that the crypto industry has urged the SEC to provide regulatory clarity.