The US Securities and Exchange Commission wants to expand the definition of “exchange” to crack down on the DeFi ecosystem.
This week, the United States Securities and Exchange Commission (SEC) has resumed a public consultation proposing to integrate decentralized finance (DeFi) platforms within the definition of “exchange.”
The proposal, which was initially introduced early last year, seeks to apply federal legislation to such blockchain-based platforms.
For the SEC, commercial operations carried out through DeFi platforms must be supervised and regulated under its regulations.
SEC opens consultation on DeFi
Within the decentralized finance ecosystem, users can access a wide range of financial services, such as asset exchange and lending, without having to go to financial institutions or trusted third parties.
However, according to SEC Chairman Gary Gensler, regardless of whether the term decentralized is used, many of the platforms operating within this digital ecosystem already fall under the current definition of an exchange or asset exchange. In addition to this, Gensler assured that several DeFi platforms and projects are operating as stockbrokers, so they have a duty to comply with securities laws.
The SEC's opening of a public consultation on the decentralized ecosystem has generated several divergences between commissioners and the crypto community.
Hester Peirce sees the end of innovation in the United States
SEC Commissioner Hester Peirce, a vocal advocate for the blockchain industry known as “Crypto Mom,” believes that the regulatory agency’s crackdown on the crypto industry undermines technological innovation rather than boosting U.S. leadership in the sector.
On the SEC's intentions to expand the definition of exchange to include DeFi platforms, Peirce stressed that the Commission is trying to solve problems that do not exist. "This Commission no longer cares that regulatory stubbornness often produces absurd consequences," said the pro-crypto commissioner, according to Reuters.
Pierce also wrote a letter to the SEC Chairman, which she began with the words, “Thank you, Mr. Chairman. Stagnation, centralization, expatriation, and extinction are the watchwords of this communiqué.” In her letter, the Commissioner criticizes the Commission’s refusal and lack of interest in promoting innovation in new technologies.
SEC calls for oversight of crypto industry
The Securities and Exchange Commission has remained steadfast in its aim to oversee the cryptocurrency industry, including the decentralized finance ecosystem, stating that the rules governing trading platforms in the United States should also apply to decentralized platforms in order to mitigate potential risks.
Some analysts believe that DeFi regulation will bring regulatory clarity to crypto, which could generate greater investor confidence, opening the door to new capital. On the other hand, there are those who believe that the strict and inflexible scrutiny that the financial regulator wants to impose will end up driving crypto companies out of the country, affecting the technological leadership of the United States.
Continue reading: The use of cryptocurrencies in the United States has grown 400% in the last two years
