Crypto Exchanges & The SEC's Proposed Redefinition Of An "Exchange"

Crypto Exchanges & the SEC's Proposed Redefinition of an "Exchange"

Recently, the SEC published a proposed new regulation (the "Proposed Rule") to amend the definition of an "exchange" for purposes of the Securities Exchange Act. Any person whose conduct meets the Proposed Rule's new definition would be required to register as an exchange or apply for an exemption by registering as an Alternative Trading System (ATS).

According to the Proposed Rule, the redefinition is intended to bring under SEC regulation certain traders in the Government Securities market. However, many observers have noted that the impact of the redefinition is over-broad in terms of its stated intent as it would extend the requirement to register as an Exchange or ATS to many business models previously outside its scope. The new definition is broad enough to cover both centralized and decentralized crypto exchanges . Simply put, the Proposed Rule extends the exchange registration requirement