• Sun. Feb 25th, 2024

SEC to Intensify Scrutiny of DeFi Exchanges as Part of Regulatory Crackdown

Xavier Jackson

ByXavier Jackson

Apr 14, 2023

The Securities and Exchange Commission (SEC) has indicated its resolve to crackdown on decentralized exchanges as part of its campaign to scrutinize the crypto industry. This is a move that will revolutionize the crypto industry and decentralized finance (DeFi) as we know it.

The SEC is set to make an announcement that decentralized exchanges must now comply with the same rules governing traditional exchanges in the country. This will finally answer the question many have been asking, which is if traditional trading rules apply to decentralized exchanges.

it will be determined by a vote on the matter by members of the commission, the outcome of which is likely to be that DEXs must comply with traditional trading rules since the commission is dominated by a democratic majority.

DEXs Coming Under the SEC

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The SEC has on several occasions claimed that several cryptocurrencies fall under its jurisdiction and should be in charge of regulating it. The most prominent is the case with Ripple in which the SEC claims that XRP is a security. The case which has been on for over two years now doesn’t seem to have an end in sight.

Similarly, SEC chairman Gary Gensler recently claimed that only Bitcoin is a commodity while Ethereum is a security. The same commission now believes that DeFi falls under its jurisdiction since it has the word “decentralized” in it, making it a part of traditional securities trading.

Gensler in prepared remarks for Friday’s meeting said “Make no mistake: many crypto trading platforms already come under the current definition of an exchange and thus have an existing duty to comply with the securities laws. Yet these platforms are acting as if they have a choice to comply with our laws. They don’t.”

Under current SEC laws, decentralized exchanges that serve as platforms for many people to trade assets are regarded as securities exchanges and must register as such or face sanctions. This definition applies to platforms that offer trading interest according to the SEC.

It would seem that the SEC has already commenced investigation of some DeFi exchanges, but no names were mentioned by the commission.

U.S Crypto Crackdown

There has been a general crackdown on the crypto industry in the U.S recently. The Commodities and Futures Trading Commission (CFTC) has already launched an investigation into Binance, claiming that it deliberately avoided federal regulation. The case against Ripple seems to be the beginning of a wave of crackdown on the industry.

This is in spite of the fact that the government is yet to come up with any clear guidelines for the industry to operate with. Meanwhile, more crypto-friendly countries are coming up with regulations that favor the industry and that can make it to flourish

Xavier Jackson

Xavier Jackson

Xavier Jackson is a talented and versatile news writer with a knack for delivering compelling stories. With a dedication to accurate reporting and a captivating writing style, his articles provide readers with insightful and thought-provoking perspectives on current events.

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