SEC Considers Reopening 'Exchange' Definition Proposal

The SEC is considering reopening the comment period for its proposal last year to re-define the definition of "exchange." From a report: The small proposed change would have sweeping implications for traditional financial firms and crypto -- and specifically decentralized finance (DeFi). The SEC's proposed change to Rule 3b-16 of the Securities Exchange Act would apply the definition of exchange more broadly -- with the Commission arguing that the rule as originally envisioned would've otherwise covered systems like DeFi. It would touch so-called alternative trading systems, request-for-quote platforms and indication-of-interest platforms, as well as other sorts of messaging ones. "Make no mistake: many crypto-trading platforms already come under the current definition of an exchange and thus have an existing duty to comply with the securities laws," Chairman Gary Gensler said in a statement. "These platforms match orders of multiple buyers and sellers of crypto securities using established, non-discretionary methods. That's the definition of an exchange -- and today, most crypto trading platforms meet it."

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