SEC’s proposal to redefine “exchange” is not constitutional according to Coin Center which says the proposed role will impact DEFI without even mentioning the word so let’s read more in our latest cryptocurrency news.
The Research director Peter Van Valkenburgh said it will require anyone writing or distributing the software to register as the SEC’s proposal to redefine “exchange” popped up. Coin Center argued that the change will constitutionally regulate speech and since it is the rule-making season at the US SEC, the lobbying groups are focused on crypto excessively.
Today Coin Center filed a comment explaining why the First Amendment arguments against the rule are strong and why the Supreme Court is poised to rule against the SEC should it finalize this new rule as drafted. https://t.co/V3bJNPte0v 2/
— ɥƃɹnquǝʞןɐΛ (@valkenburgh) April 14, 2022
Washington DC-based group Coin Center directed its attention to the SEC’s proposed redefinition of the term “exchange” in the Securities Exchange Act to include systems that offer the use of the non-firm trading interest and communications protocols that can bring together buyers and sellers of securities. In the comment letter to the agency, Coin Center called the rule unconstitutional. The change to a definition in the first law draft from 1934 seems simple especially when placed in the recent language that we know today but the consequences are still there. The entities that fall under the definition will be required to register with the SEC and according to Peter Van Valkenburgh, this will include anyone writing or distributing software even though the agency never mentions DEFi or crypto.
DEFI refers to a group of blockchain-based tech that allows people to transact on a peer-to-peer basis without an intermediary and in the DEFI space, the decentralized exchange allows people to trade tokens without relying on a third party to take custody of the assets being traded. In Valkenburhg’s view, the redefinition amounts to switching from regulation of conduct to the regulation of speech because it can affect software publishers that make communication protocols available. Coin Center also argued that the change is meant to bring other financial services organizations but the way it does so will create an inapprorperlty broad standard for registration that can impose a restraint on the protected speech activities of software developers.
Coin center thinks that the case is quite simple and urged the SEC to rethink the draft and avoid wasting the Supreme Court’s time. The letter cited a 1985 Supreme Court case where the SEC was sued over a ban on publishing newsletters with the stock tips and the SEC statute was overturned. The public comments period on the rules closes in a few days after which the SEC will determine whether to make changes to the final rule.