SEC Chair Gary Gensler, the amendments aim to close a “regulatory gap” stemming from trading platforms that aren’t registered as exchanges or brokerages with the SEC
Meanwhile, SEC watchdogs are plotting to ambush crypto markets with a “Trojan Horse” regulation.
Last week, the SEC introduced a seemingly unrelated 654-page plan aimed at regulating “Treasury markets platforms.” Pro-crypto Commissioner Hester Peirce, however, warns it’s a sweeping crypto regulation in disguise. While the proposal doesn’t mention crypto, its new rules would let regulators probe into crypto platforms and even decentralized finance (DeFi) protocols.
“The proposal includes very expansive language, which, together with the chair’s apparent interest in regulating all things crypto, suggests that it could be used to regulate crypto platforms,” Peirce wrote in an email, as reported by Bloomberg” She added: “The proposal could reach more types of trading mechanisms, including potentially DeFi protocols.”
Technically, the SEC is proposing to “expand Regulation ATS for alternative trading systems (ATS) that trade government securities, NMS tock, and other securities,” “extend Regulation SCI to ATSs that trade government securities” and “amend the SEC rule regarding the definition of an ‘exchange’.
According to SEC Chair Gary Gensler, the amendments aim to close a “regulatory gap” stemming from trading platforms that aren’t registered as exchanges or brokerages with the SEC. He also noted the proposed rules would extend existing regulations concerning platforms that trade Treasuries and other government securities.
There will be a 30-day window counting from January 26 for blockchain industry insiders, trading platforms, and other stakeholders to comment on the new SEC proposed plan.
Peirce thinks this is an unusually short comment period for such a significant regulatory proposal. Coupled with Biden’s planned executive order, that may reflect regulators’ itch to tighten the grip on the exploding decentralized finance market.
After the comment period, the SEC will hold another vote to reach the final decision.