SEC Commissioner Hester Peirce has criticized the U.S. Securities and Exchange Commission’s recent attempt to redefine the term “exchange” under the Exchange Act Rule. According to Peirce, the SEC is expanding its reach to solve “problems that do not exist,” and in the process, stifling innovation. Peirce, who is also known as “crypto mom” in cryptocurrency circles, believes that the decision will render innovation “kaput” and further confuse cryptocurrency circles in the U.S. She also argued that the SEC is using the rulemaking process as a threat and discouraging entrepreneurs from entering the market.
Kraken and Coinbase, two U.S.-based crypto exchanges, have complained about the SEC’s course of action. Kraken has already settled a case with the SEC, while Coinbase has received a Wells notice. Peirce also addressed the lack of details when it comes to the applicability of these new standards to defi structures, commenting that the norm does not even consider if compliance for these platforms would be possible.
The SEC’s decision to amend the definition of “exchange” in the Exchange Act Rule has caused dissent among members of the commission. The amendment targets defi platforms and how they can be regulated under this new proposal. SEC Chair Gary Gensler clarified that many of these platforms are already covered by existing rules. Commenters will have a period of 30 days to issue their ideas and doubts to the institution, which will be discussed and potentially applied to the amendment.
Peirce’s stance on the amendment of the “exchange” definition has been met with mixed reactions. Some believe that the SEC is overreaching and stifling innovation, while others argue that the SEC is simply trying to protect investors in the crypto markets. In any case, the debate over the definition of “exchange” is likely to continue as the SEC moves forward with its proposed amendment.
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