New Proposal Could Give SEC Broad Powers to Regulate Crypto and Defi Platforms – Regulation

A US Securities and Exchange Commission (SEC) commissioner has raised concerns about a new proposal that could give the securities regulator new powers to regulate cryptocurrency platforms and decentralized finance (Defi) protocols.

A new SEC proposal could harm the crypto industry, warns Commissioner Peirce

US Securities and Exchange Commission (SEC) Commissioner Hester Peirce has warned that a new proposal could be devastating for the crypto industry, Bloomberg reported on Tuesday. Peirce is a pro-Bitcoin official who is also known as “crypto mom” in the crypto community.

The SEC last week proposed changes to regulate “significant platforms for treasury markets” in Regulation ATS. The 654-page proposal aims to “expand ATS regulation for alternative trading systems (ATS) that trade government securities, NMS [National Market System] stocks and other securities.” It also proposes to “extend Regulation SCI to ATSs that trade in government securities” and “amend the SEC rule relating to the definition of an ‘exchange’ to close a regulatory gap.”

Commissioner Peirce warned that while the proposal does not mention crypto, it could give officials sweeping new powers to audit cryptocurrency platforms, including decentralized finance (Defi) protocols. She told the publication:

The proposal contains very broad language that, coupled with the chairman's apparent interest in regulating all things crypto, suggests that it could be used to regulate crypto platforms.

The pro-Bitcoin commissioner emphasized that “the proposal could reach more types of trading mechanisms, including potential Defi protocols.”

The securities watchdog claims that the proposal aims to close a “regulatory gap” created by market participants using platforms that are not registered as exchanges or brokers to trade all types of securities. SEC Chairman Gary Gensler said last week that this would “promote resiliency and greater access to the Treasury market.”

The proposal is now open to public comment. The SEC must hold another vote before the regulations become final.

Gensler has been vocal about it need to regulate Cryptocurrency and Defi platforms. In December, he added a crypto advisor to his management. In January, the SEC chairman said: “If trading platforms do not come into the regulated space, this would be another year in which the public is vulnerable.”

Do you think the SEC should have more power to regulate crypto trading platforms and Defi protocols? Let us know in the comments section below.

Kevin Helms

As a student of Austrian economics, Kevin discovered Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects, and the interface between economics and cryptography.

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