Hester Peirce Warns Proposed SEC Reform of Securities Trading Platforms Could Threaten DeFi

"Crypto Mom" believes a new 654-page plan designed to add oversight to trading government securities could also allow new powers to scrutinize DeFi platforms.

AccessTimeIconFeb 1, 2022 at 3:32 p.m. UTC
Updated May 11, 2023 at 6:36 p.m. UTC

U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce has warned that plans by the agency to reform government securities trading could threaten decentralized finance (DeFi).

  • Affectionately referred to as "Crypto Mom" for her longstanding support for the industry, Peirce believes a new 654-page plan designed to add oversight to trading government securities could also allow new powers to scrutinize DeFi platforms.
  • The new rules proposed by the SEC are designed to force platforms not registered as exchanges that still deal in the trading of all types of securities to register as "communication protocol systems."
  • "The proposal includes very expansive language, which, together with the chair’s apparent interest in regulating all things crypto, suggests that it could be used to regulate crypto platforms," Peirce said in an emailed statement, according to a Bloomberg report Tuesday.
  • “The proposal could reach more types of trading mechanisms, including potentially DeFi protocols," Peirce wrote.
  • SEC Chair Gary Gensler has said previously that DeFi is not immune from oversight by the markets regulator, since projects that reward participants with incentives or digital tokens could enter into territory that is subject to SEC regulation.

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Jamie Crawley

Jamie Crawley is a CoinDesk news reporter based in London.


Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.