The SEC’s ambiguous rule could have a chilling effect both on decentralized finance and on the provision of liquidity to centralized crypto exchanges.
By Jenny Cieplak, Marlon Q. Paz, Stephen P. Wink, and Naim Culhaci
The Securities and Exchange Commission (SEC) adopted a new rule on February 6, 2024, further defining the phrase “as part of a regular business” — which is an integral part of what it means to be a “dealer” under securities laws.
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The amended definition could provide a new means for the SEC to regulate crypto platforms.
By Stephen P. Wink, Marlon Q. Paz, Naim Culhaci, Ian Irlander, and Deric Behar
We previously published a blog post on the set of proposed amendments (Proposal) issued on January 26, 2022, by the Securities and Exchange Commission (SEC) regarding the regulation of alternative trading systems (ATSs) that would, among other things, substantially expand the activities covered by the definition of an “exchange” as interpreted by Rule 3b-16 under the Exchange Act to capture “Communication Protocol Systems”. Whereas we previously offered our general views on the proposed expansion of definitions and resulting potential impact on the securities industry, now we turn specifically to the potential impact of the Proposal on platforms trading digital assets.