The Blockchain Association submitted additional comments to the Securities and Exchange Commission’s proposed rule to amend the interpretation of the definition of “exchange.”
The SEC has proposed changing the definition of an “exchange,” so that, if adopted, it would potentially encompass entities such as DeFi (decentralized finance) protocols that do not fit the current definition of an exchange, as intended in the Exchange Act.
Blockchain Association officials said the proposal fits with what they call the SEC’s recent anti-crypto stance. Further, they say it expands the commission’s authority to bring as many people, protocols, and projects under its oversight as possible.
“Instead of crafting fit-for-purpose rules that recognize the unique nature of decentralized protocols and related entities, the SEC expands its jurisdiction beyond the limits originally set by Congress, while raising serious constitutional and APA concerns. This is the latest step in the Commission’s campaign to ban crypto in the U.S.,” Kristin Smith, CEO of the Blockchain Association, said.
If this altered definition is enacted as designed, it would effectively ban DeFi in the United States, association officials said. They added that this definition of an exchange is not tenable, and it extends beyond the statutory authority granted to them by Congress. Further, they said the proposal’s impact on DeFi raises major questions of economic significance. The conclude by saying the SEC must receive additional congressional authority prior to finalizing this proposal.
The SEC reopened the comment period of April 14.