Tag Archives: US Security and Exchange Commission

SEC Reopens Comment Period To Amend Exchange Act Rule

The Securities and Exchange Commission posted a press release titled: “SEC Reopens Comment Period for Proposed Amendments to Exchange Act Rule 3b-16 and Provides Supplemental Information” on April 14, 2023. From the press release:

“The Securities and Exchange Commission today reopened the comment period and provided supplemental information on proposed amendments to the definition of “exchange” under Exchange Act Rule 3b-16. The Commission initially proposed the amendments in January 2022 and reopened the comment period in May of 2022. The reopened period closed on June 13, 2022.

The reopening release reiterated the applicability of existing rules to platforms that trade crypto asset securities, including so-called “De-Fi” systems, and provides supplemental information and economic analysis for systems that would be included the new, proposed exchange definition. The reopening release also requested information and public comment on crypto asset securities trading on such systems and certain aspects of the proposed amendments applicable to all securities.

“I believe this supplemental release will help address comments on the proposal from various market participants, particularly those in the crypto markets,” as SEC Chair Gary Gensler. “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. Investors in the crypto markets must receive the same time-tested protections that the securities laws provide in all other markets. I welcome additional public comment on all aspects of the proposal in light of the information in this supplemental release.”

The public comment period will remain open for 30 days after publication of the reopening release in the Federal Register.”

Reuters reported that the U.S. Securities Exchange Commission met on Friday to open public comment again on its proposal to expand the definition of an “exchange,” clarifying that its existing rules on exchanges also apply to decentralized cryptocurrency platforms.

According to Reuters, the SEC voted 3-2 to take additional comments from the public after crypto firms criticized the plan as vague and aimed at roping in decentralized finance platforms, known as DeFi platforms, that would otherwise not be subject to the regulator’s oversight.

DeFi platforms allow users to lend, borrow, and safe in digital assets, bypassing the traditional gatekeepers of finance such as banks and exchanges, Reuters reported.

The officials estimated that about a dozen crypto firms would fall under the expanded definition, but declined to provide any more specifics about which firms.

Reuters also reported that Friday’s public vote to reopen the comment period for 30 days was unusual. Typically, the commission would decide behind-the-scenes if extending a public comment period is necessary.

The meeting underscored the ideological divide among the commissioners, with both Republican commissioners dissenting.

Based on all of this, it seems to me that the people most likely to comment about this are going to be those who run crypto currency DeFi platforms. It might also attract commenters who use those platforms.