Washington, D.C. (June 13, 2023) Today, pursuant to the Securities and Exchange Commission’s April 14, 2023 reopening of the comment period, Blockchain Association submitted additional comments to the SEC’s notice of proposed rulemaking to amend the interpretation of the definition of “exchange” in Rule 3b-16 under the Securities Exchange Act of 1934 (“Exchange Act”).
The SEC has proposed altering the definition of an “exchange,” expanding the concept so broadly that, if adopted, would potentially capture entities such as DeFi protocols that do not fit the definition of an “exchange” as Congress intended in the Exchange Act. The SEC’s proposal fits with the Commission’s recent anti-crypto stance, and expands the Commission’s authority to bring as many people, protocols, and projects under its oversight as possible. If this altered definition is enacted as designed, it would effectively ban DeFi in the U.S., capturing any individual or “group of persons,” that “act in concert,” even if those actions are “informal.” Needless to say, this wide-ranging and inexact formulation of an “exchange,” is not tenable. The SEC’s expansion of the definition of “exchange” extends beyond the statutory authority granted to them by Congress and the Proposal’s impact on DeFi raises major questions of economic significance. The SEC must receive additional congressional authority prior to finalizing this Proposal.
The following statement is attributed to Kristin Smith, Blockchain Association CEO:
“Instead of crafting fit-for-purpose rules that recognize the unique nature of decentralized protocols and related entities, the SEC expands its jurisdiction beyond the limits originally set by Congress, while raising serious constitutional and APA concerns. This is the latest step in the Commission’s campaign to ban crypto in the U.S.”
Please find the entire comment letter here.
