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ARTICLE · 12 OCTOBER 2023

SEC's ATS Re-Proposal Doubles Down On DeFi And Digital Asset Regulation

Goodwin Procter LLP
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In April 2023, the SEC re-proposed amendments to Exchange Act Rule 3b-16 to expand the definition of what it means to be an exchange.

United StatesTechnology
Nicholas J. Losurdo
Nicholas J. Losurdo
Christopher Grobbel
Christopher Grobbel
Adam Bruce Fovent
Adam Bruce Fovent

In April 2023, the SEC re-proposed amendments to Exchange Act Rule 3b-16 to expand the definition of what it means to be an exchange. When the SEC initially proposed these amendments in January 2022, there were zero direct references to crypto, blockchain, distributed ledger technology, or decentralized finance protocols (DeFi). However, the open-ended nature of the proposed new rule text attracted considerable attention and concern over potentially capturing digital asset exchanges and DeFi protocols within the purview of Regulation ATS. With a heavy focus on digital assets and DeFi in the SEC's re-proposal and with a split 3-2 vote, the re-proposal confirms these concerns.

Our summary of the initial January proposal covers many of the technical aspects in scope and of discusses the requirements of Rule 3b-16 generally:

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