Published: 29.03.2022
Article reading time:
2 minutes.
Gabriel Shapiro, general counsel at Delphi Digital, an analyst firm, believes that after the SEC proposal is passed, many decentralized exchanges will not be able to obtain a regulator’s license.
Crypto industry lawyers have raised concerns about a US Securities and Exchange Commission (SEC) proposal that seeks to introduce a new definition of a securities dealer. The move, according to industry experts, could hurt the decentralized finance (DeFi) industry.
The protest from the crypto community is that the proposal would expand the definition of a dealer to include people and businesses that use automated and algorithmic trading technologies to complete transactions and provide liquidity to the market.
While this 200-page proposal is aimed at electronic trading of US Treasuries, the footnote states that the proposed rule would also apply to cryptocurrencies that are recognized as securities.
Gabriel Shapiro, General Counsel at Delphi Digital expressed concernthat, if accepted, the proposal could destroy DeFi. On Twitter, he wrote that the introduction of new rules is a threat to the decentralized finance industry.
“This is an all-out shadow attack on decentralized finance,” Shapiro said.
He explained that the SEC proposal would require all automated market makers (AMMs) and liquidity providers with more than $50 million in total assets to register with the SEC, which is not feasible for most if not all decentralized exchanges.
Shapiro argues that any decentralized exchange that meets the new offering criteria and is not registered with the SEC can be declared an unregistered dealer, a criminal offense under securities law.
Some lawyers see the inclusion of cryptocurrency as a separate footnote in the grand proposal as a deliberate attempt to introduce confusion and uncertainty into the cryptocurrency markets.
Recently, Faryar Shirzad, director of policy at Coinbase exchange, called on the crypto community to oppose the EU amendments to the Crypto Travel Rule – recommendations for conducting international cryptocurrency transactions. The amendments require exchanges to collect, verify and report information about individuals who are not users of the site, but use their own wallets.
Source: Bits
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