Recently, the US Securities and Exchange Commission, the SEC, proposed new rules to try to address a regulatory loophole and force companies outside its oversight to comply with existing regulations.
As reported by the Financial Times (FT), this measure is raising concerns on the part of cryptocurrency platforms.
That’s because it’s believed that the industry could come under the SEC’s definition of an “exchange,” although the proposition passed in January does not explicitly mention digital asset exchanges.
According to Stephen Wink, a partner at the law firm Latham & Watkins, there are certainly concerns around cryptocurrencies.
According to him, a broader definition of an exchange would include platforms that provide “communication protocols” through which “buyers and sellers can interact and agree to the terms of a transaction”.
Some believe that this proposal could directly affect automated market makers. This includes Uniswap, which allows users to trade tokens without intermediaries, making enforcement difficult.
SEC tightens siege on exchanges
As SEC Chairman Gary Gensler highlighted, the proposals aim to modernize the guidance for defining an exchange. The aim is to “cover all types of asset classes that bring together buyers and sellers”.
The SEC gave a 30-day deadline to receive public comment on the proposal. But crypto market players consider the time too short.
According to a source heard by the FT, if the platforms are framed in the guidance, they will probably not be in compliance with the laws.
For the founder of the decentralized platform Curve Finance, Michael Egorov, the new proposal “is not very clear on whether code developers, deployers or interface providers are affected or not”.
“I don’t think the rule would apply that way, at least in DeFi,” he said, calling the SEC “mean.”
But it’s not just Egorov who has doubts about the proposal. Linklaters’ Head of Global Technology, Joshua Ashley, noted that there are many open questions about this rule.
He said the new guidance was designed to reflect new ways of doing business, not to “intentionally capture” a particular industry.
The regulatory implications for cryptocurrency platforms if the rules are adopted are also unclear. However, experts believe potential impacts include a jump in SEC filings.
Or else, a number of platforms must dispose of tokens that qualify as securities.