SEC Implements New Regulations: Increased Oversight on Crypto and DeFi in Sight
Summary:
The US Securities and Exchange Commission (SEC) implemented new regulations requiring more market participants to register with it, raising the specter of increased oversight over crypto and decentralized finance (DeFi). The rules redefine "dealer" and "government securities dealer" under Securities Act Rules. It compels traders with major liquidity influence to register unless there's an exception. These regulations extend to dealers who manage or possess $50 million. These changes have sparked contention among crypto industry representatives and politicians. The rules become effective 60 days post their Federal Register publication.
On February 6th, the US Securities and Exchange Commission (SEC) implemented new rules necessitating added market participants to register and align with a self-regulatory body while adhering to federal securities regulations. This move potentially heightens proctoring over cryptocurrency and decentralized finance (DeFi). These amendments, stretching over 247 pages, were brought up in 2022 and involve a redefinition of terms like "dealer", "government securities dealer" in the Securities Act Rules, and the statement "as part of a regular business" as mentioned in the Securities Exchange Act of 1934. The rules would pertain to traders who considerably influence the liquidity in the market. Particularly, under the fresh definitions, a dealer might represent trading that returns profits mostly from capturing bid-ask spreads or from any incentives provided by trading platforms for liquidating trading interest. SEC Chairman, Gary Gensler, emphasized that these steps are sensible and that anyone trading in a fashion that aligns with the market-making model must register. The new rules only apply to dealers managing or possessing $50 million. This rule alteration saw stiff resistance from two Republican members of SEC. Despite the fact that the 2022 proposed rule, comprising of 194 pages, barely touched upon cryptocurrency, the final rule dedicates a whole section to crypto. However, industry representatives in the sphere of crypto and supportive politicians contested strongly. Mark Uyeda, a Republican member of SEC, deterred this rule amendment, stating that it extends its authority unnecessarily, essentially rendering the "dealer" definition without limits. However, Commissioner Caroline Crenshaw supported the modifications, indicating that there's a distinct loophole that releases a significant section of market dealers from compulsory registration. The rules are slated to be effective 60 days post their publication in the Federal Register.
Published At
2/7/2024 12:17:05 AM
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