Intro & Call to Action The SEC's new securities exchange / ATS amendment proposal has been published, alongside a strenuous dissent from Commissioner Hester Peirce. The proposal is massive and, as noted by Peirce, encompasses a radical paradigm shift that was not contemplated in the SEC’s previous related concept release and would overrule previous no-action guidance. It does not make express reference to blockchain, DeFi, automatic market-making protocols, etc., but I nevertheless believe the SEC staff is very likely to use its expanded definitions of securities “exchange” to bolster the SEC’s currently weak arguments that AMMs constitute securities exchanges. At the same time, the proposal offers no method of registration and reporting that could actually be followed by anyone who arguably “makes available” an AMM protocol or other DeFi systems—thus, to whatever extent the proposed changes might purport to turn AMMs and other DeFi systems into “securities exchanges”, it is at a minimum irresponsible and thoughtless as regulation. Because the proposal achieves this expansion by providing new restraints on “communication protocols,” I believe it may also be unconstitutional as a restraint on free speech.
Thank u for this. My only question is: how
does one take action from here? What activities can people engage in to succeed in getting the SEC to change the proposal within the next 30 days ?
With Gensler's broad statement this could also target secondary market IPO platform for alternative asset investing like Rally, Masterworks or Otis
Thank you for this great summary.
> the SEC must revise this proposal to make clear that it is not intended to, in effect, prohibit the creation and deployment of mere code for peer-to-peer token trading or websites
> There is no way mere coders or mere website operators can register with FINRA, track the identities and trades of AMM systems ... and therefore, if applied to such persons, this new rule would be banning a vast swathe of technologies and free speech regarding those technologies.
When you say "the SEC must" I feel this must be their (not only SEC) express intent as part of a wider plan that we first became alerted to with the FATF guidance last year. So the idea of objecting, while necessary and to be encouraged, is like telling an invading army that bringing their weapons across a border is against the law
Crypto regulation is way to important to leave to unelected civil servants, renowned for turning-door career moves in & out of incumbent players.
Admittedly, the 1933 Securities Act and its 1934 sister need urgent updating. The US' legislative power should undertake a major overhaul of the Securities Act and other outdated laws.
On the other hand something in me actually prefers to have House & Senate elections before such an overhaul takes place. I am sure crypto will become a major theme, if not in public debate it will be a major voting determinator for a lot of people! Until that moment, we can watch with anger and joy at the same time how Gary Gensler and other bureaucrats prove how obsolete certain sectors of public administration are making themselves at a rapid pace...
Would this proposal cover Reddit, Twitter, or other platforms where people discuss trading/investments?
> Furthermore, those who arguably “make available” AMMs, since they do not control the AMMs, have no means of ensuring that securities or tokens that are integral to a securities scheme are not traded through the AMMs—only the users of the AMMs can decide that for themselves.
Can you explain this a bit more? There remains a person/group who created the program and paid to have it launched on the chain. Why are they not responsible for their program acting within the letter of the law?
If one simply offers tokens for sale on their website but not offering to purchase or to set up purchasing capability, does that constitute a AMM?
The new "thought" police. Policing private debates about what to do.