A group of Republican lawmakers on the House of Representatives Financial Services Committee sent a letter to the Securities and Exchange Commission (SEC), urging it to withdraw the proposed rule that would expand the definition of “stock market” under the Exchange Act.
Lawmakers argue that the rule would exceed the SEC’s mandate, hinder innovation, harm the digital asset market, and contradict the SEC’s mission.
The proposed rule, promulgated by the SEC in January 2022 and reopened in April 2023, is to include systems that use “communication protocols” and systems that display and match imprecise trading in securities in the definition of an exchange under Rule 3b-16 of the Exchange Act. will change it.
This will require such systems to register as either an exchange or a brokerage house and comply with the ATS Regulation, which imposes various filing and operational requirements on alternative trading systems.
Lawmakers, led by President Patrick McHenry, argue that the proposed rule will cover a wide range of individuals and institutions that do not function like traditional intermediaries or exchanges, such as software developers in the digital asset ecosystem and agents in decentralized finance (DeFi) systems.
They also accuse SEC Chairman Gary Gensler of using the proposal to impose his own personal views on digital assets without adequate analysis or justification.
The letter states that the proposed rule “will hinder innovation and cryptocurrency market participants and the U.S. economy in general” and “shows the SEC’s hostility towards technology that is not fully compliant with the rules and regulations that exist today.”
*Not investment advice.
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