SEC Commissioner Hester Peirce States Proposed Amendments to Definition of ‘Exchange’ Render Innovation ‘Kaput’
Hester Peirce, a commissioner of the U.S. Securities and Exchange Commission (SEC), has issued her opinion on the recent attempts of the institution 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 do not exist,” stifling innovation in the process.
SEC Commissioner Hester Peirce Issues Dissenting Opinion
U.S. SEC Commissioner Hester Peirce, also known in cryptocurrency circles as “crypto mom,” has written a letter blasting the recent decision of the Commission to amend the definition of “exchange” under the Exchange Act Rule. Peirce states that instead of bolstering innovation, this decision will render it “kaput,” bringing even more confusion to cryptocurrency circles in the U.S.
Peirce argued that, compared with the 90’s SEC that acted in a different way, today’s SEC uses the rulemaking process as a threat. She commented:
Today’s Commission tells entrepreneurs trying to do new things in our markets to come in and register. When entrepreneurs find they cannot, the Commission dismisses the possibility of making practical adjustments to our registration framework to help entrepreneurs register, and instead rewards their good faith with an enforcement action.
Two U.S.-based crypto exchanges — Kraken, which already settled a case with the institution, and Coinbase, which has received a Wells notice — have complained about this course of action on the part of the SEC.
Peirce also addressed the lack of details when it comes to the applicability of these new standards to defi structures, commenting that the norm does not even consider if compliance for these platforms would be possible.
The cause of this dissent lies in the introduction of supplemental information to the definition of “exchange” in the Exchange Act Rule, directed to clarify which cryptocurrency structures fall under the umbrella of the agency.
While the amendment targets defi platforms and how can they be regulated under this new proposal, SEC Chair Gary Gensler clarified that many of these platforms are already covered by existing rules. He stated:
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. Investors in the crypto markets must receive the same time-tested protections that the securities laws provide in all other markets.
Commenters will have a period of 30 days to issue their ideas and doubts to the institution, which will be discussed and potentially applied to the amendment.
What do you think about Hester Peirce’s stance on the amendment of the “exchange” definition? Tell us in the comments section below