SEC Considers Reopening 'Exchange' Definition Proposal

The SEC is considering reopening the comment period for its proposal last year to re-define the definition of "exchange." From a report: The small proposed change would have sweeping implications for traditional financial firms and crypto -- and specifically decentralized finance (DeFi). The SEC's proposed change to Rule 3b-16 of the Securities Exchange Act would apply the definition of exchange more broadly -- with the Commission arguing that the rule as originally envisioned would've otherwise covered systems like DeFi.

It would touch so-called alternative trading systems, request-for-quote platforms and indication-of-interest platforms, as well as other sorts of messaging ones. "Make no mistake: many crypto-trading platforms already come under the current definition of an exchange and thus have an existing duty to comply with the securities laws," Chairman Gary Gensler said in a statement. "These platforms match orders of multiple buyers and sellers of crypto securities using established, non-discretionary methods. That's the definition of an exchange -- and today, most crypto trading platforms meet it."

Definition of Exchange

[gosso920]

"Mail Server software." - Microsoft

FDR had a lot of bad ideas. SEC still is one.

[Seven Spirals]

The SEC is a bad idea. Fraud and deceptive financial practices were already illegal (Ponzi and others happened in the late 1800's). Look at the SEC's actions. They tend to go after small and medium sized entities and leave the "too big to fail" ones completely untouched or with only wrist-slaps. It just becomes one more way for the big banks to avoid competition, since affording regulatory compliance (and using the system to avoid any accountability) is easy for them. Regulatory agencies get captured. Even if you like the idea of regulation, look at how the agency operates in practice. [brooklaw.edu]

Re:The SEC is unconstitutional...

[pete6677]

They should. The SEC in it's current form is completely useless. It utterly fails to protect investors. All it does is impose costly reporting requirements on legitimate companies that do nothing to make the financial system more stable overall.

The SEC should propose the changes only

[schwit1]

The elected in Congress should be required to up/down vote on it. If it has the force of law it should have to be approved by Congress.

I'm feeling pretty good about this actually

[Hugedatabase]

This is really good. It means our government really knows what it's doing. Next on the chopping block "re-define accounting". After the pesky issue of financial reporting gets taken care of they can focus on the real problem with their newest definition proposal: "define fraud" quickly followed by "define reality".