The US Securities and Exchange Commission (SEC) wants to expand the organization’s definition of a stock exchange in a new proposal. According to some, with this proposal, the SEC may want to lay the groundwork for regulating decentralized crypto exchanges. This could affect DeFi altcoin projects. Cryptocoin. com, we convey the details…
How could SEC proposal affect DeFi and altcoin projects?
In a new proposal released Thursday, the SEC seeks to broaden the definition of a stock exchange. The proposal aims to move the SEC’s definition from systems that match securities orders using a traditional order book to any system that allows buyers and sellers to communicate their securities trading interests.
Under this new definition, decentralized exchanges such as Uniswap will be subject to SEC regulations and will therefore need to register with the SEC as a securities broker. The new legislation would effectively eliminate decentralized exchanges operating in the United States, as decentralized exchanges have no way of complying with current demands placed on securities exchanges by the SEC. There are also concerns that this may affect DeFi altcoins such as Terra (LUNA), Uniswap (UNI), Chainlink (LINK), Aave (AAVE), Curve DAO Token (CRV).
DeFi enthusiast Gabriel Shapiro highlighted the potentially devastating effects of the proposal in a blog post, saying, “I believe this could also be unconstitutional as a restriction on freedom of expression, as the proposal introduces new restrictions on communication protocols.” Also, SEC official Hester Peirce, in her statement of opposition to the proposal, reiterated her concerns about labeling Shapiro’s communications protocols as stock exchanges. Peirce also pointed out that the Commission gave the public only 30 days to read, understand and evaluate the proposal.
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