Hester Peirce, a commissioner of the US Securities and Exchange Commission (SEC), has given her opinion on the institution’s recent attempt to change the definition of “exchange” under the Exchange Act Rule. According to Peirce, the institution is now expanding its reach to solve “problems that don’t exist,” stifling innovation in the process.
SEC Commissioner Hester Peirce dissents
US SEC Commissioner Hester Peirce, also known in cryptocurrency circles as “crypto mom”, has written a letter blasting the recent decision by the commission to change the definition of “exchange” under the Exchange Act Rule. Peirce states that instead of boosting innovation, this decision will “kaput” it, bringing even more confusion to cryptocurrency circles in the US
Peirce argued that compared to the 1990s SEC that acted differently, today’s SEC uses the rulemaking process as a threat. She commented:
Today’s commission is asking entrepreneurs who are trying to do new things in our markets to come in and register. When entrepreneurs find they cannot, the Commission rejects the opportunity to make practical adjustments to our registration framework to help entrepreneurs register, and instead rewards their good faith with an enforcement action.
Two US-based crypto exchanges – Kraken, which has already settled a case with the institution, and Coinbase, which received a Wells notice – have complained about this action by the SEC.
Peirce also addressed the lack of detail regarding the applicability of these new standards to defistructures, commenting that the standard does not even consider whether compliance for these platforms would be possible.
The reason for this dissent lies in the introduction of additional information to the definition of “exchange” in the Exchange Act Rule, aimed at clarifying which cryptocurrency structures fall under the agency’s umbrella.
While the change targets defi platforms and how they may be regulated under this new proposal, SEC Chairman Gary Gensler clarified that many of these platforms are already covered by existing rules. He stated:
Make no mistake: many crypto trading platforms already fall under the current definition of an exchange and thus have an existing duty to comply with securities laws. Investors in the crypto markets must receive the same time-tested protections that securities laws provide in all other markets.
Commenters will have a period of 30 days to send their ideas and doubts to the institution, which will be discussed and potentially applied to the change.
What do you think of Hester Peirce’s stance on the change to the “exchange” definition? Tell us in the comments section below
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