SEC Commissioner Hester Peirce says that the vague language in the agency's new proposal that aims to modernize the definition of an exchange could pose a threat to decentralized finance.
In a statement published on Jan. 26, SEC Chair Gary Gensler claims that it is important to update the rules in order to keep up the pace with "increasingly electronified" systems that trade government securities:
Over the decades since Congress put in place the definition of an exchange, there have been many changes to platforms — in particular, that they are increasingly electronified.
While the proposal does not mention cryptocurrencies, Peirce warns that it could be used for expanding oversight over crypto trading platforms:
The proposal could reach more types of trading mechanisms, including potentially DeFi protocols.
Gensler has repeatedly stated that DeFi protocols tend to be centralized, urging the entrepreneurs behind these platforms to register with the SEC. He has also opined that the vast majority of cryptocurrencies are unregistered securities.In September, the Wall Street Journal reported that the SEC had started investigating DeFi giant Uniswap.
Peirce, who is now a lone Republican in the agency following the recent departure of Elad Roisman, has been a staunch crypto advocate for years, bemoaning the lack of regulatory clarity in the U.S.