New Rules from SEC Impact Crypto Liquidity
If you’re involved in providing liquidity for cryptocurrencies, you need to be aware of the strict rules introduced by the United States Securities and Exchange Commission (SEC) on February 6. These rules cover federal securities laws and also have an impact on the cryptocurrency and decentralized finance (DeFi) sectors.
Implications of the New Rules
Proposed in March 2022, the 247-page rule finally got the go-ahead after a 3-2 majority vote from the SEC. The rule affects those dealing with crypto assets considered as securities, as well as the DeFi sector.
According to the rule, individuals trading in crypto asset securities within the DeFi market must register as a “dealer” or “government securities dealer” if their activities meet the criteria of being “part of a regular business.”
Industry Voices Speak Out
In response to the SEC’s decision, the DeFi Education Fund strongly criticized the move, calling it “misguided and unworkable.” CEO Miller Whitehouse-Levine believes the SEC failed to consider the practical difficulties DeFi entities face, suggesting the rules are unfriendly to innovation.
Gensler Defending the Rules
SEC Chair Gary Gensler defended the regulatory changes, highlighting the $50 million exception and the importance of protecting investors. During the meeting, Hester Peirce raised questions about the inclusion of automated market makers (AMMs) in the rules, expressing concerns about transparency and market participant’s understanding of SEC rules.
Countdown to Implementation
The final rules will come into effect 60 days after being published in the Federal Register, with a one-year compliance period. As the crypto industry gears up for increased regulatory attention, the full impact of these SEC rules remains uncertain in decentralized finance.
Hot Take: The Impact of New SEC Rules on Crypto Liquidity
The new SEC rules are set to significantly impact those providing liquidity for cryptocurrencies. Despite industry criticisms, the rules are defended by SEC Chair Gary Gensler, with concerns raised about the inclusion of automated market makers and the impact of these rules on the decentralized finance sector.
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