The regulatory body enacts norms to classify certain market participants as “brokers” or “government securities brokers.”
The Securities and Exchange Commission (SEC) of the United States has updated the Securities Act of 1934, extending its regulatory reach to new market participants, notably within the cryptocurrency sector. Announced on February 6, 2024, by the SEC, the update includes new rules mandating intermediaries in the DeFi space to register with the Commission. This regulation aims to integrate significant roles in liquidity provision under the expanded definition of “brokers,” impacting those who facilitate trading by offering the best available prices on both sides of the market for the same security. The rules, which also establish a minimum threshold for registration based on assets controlled, are set to take effect 60 days after their publication in the Federal Register. The inclusion of cryptocurrencies in the regulation, without exceptions, aims to ensure market integrity, resilience, and transparency, amidst ongoing debates over the classification of cryptocurrencies as securities. The decision has sparked controversy, particularly within the DeFi sector, due to the broadened broker definition and concerns over compliance feasibility.
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