Paradigm slams SEC’s ‘incoherent’ attempt to police decentralized exchanges
Crypto venture capital firm Paradigm has slammed the U.S. Securities and Exchange Commission’s attempt to redefine the term “exchange” — which would if accepted, bring decentralized exchanges under its purview.
On June 8, the firm sent a lengthy 14-page letter to the SEC Secretary, Vanessa Countryman, regarding the regulator’s proposed redefinition of the term “exchange” in the 1934 Securities Exchange Act.
The SEC plans to revise the 89-year-old legislation to encompass decentralized exchanges (DEXes) and decentralized finance (DeFi) into the definition of "exchange." Because the term DEX contains the word “exchange” the SEC wants to treat it the same as a securities or stock exchange.
Today, @paradigm commented on the @SECGov's proposed redefinition of “exchange" Through haphazard rulemaking, the SEC inappropriately attempts to bring crypto trading platforms, including DEXs, under its remit and regulate them as securities exchangeshttps://t.co/ibv2u1n9VU
Paradigm, however, argues that fundamental differences between DEXes and exchanges make treating them as "exchanges" under the Act both "invalid and incoherent.”
Paradigm’s legal counsel Rodrigo Seira commented that through this “haphazard rulemaking, the SEC inappropriately attempts to bring crypto trading platforms, including DEXs, under its remit and regulate them as securities exchanges.”
In March 2022, the SEC proposed changes to the Act to include systems that “offer the use of non-firm trading interest and communication protocols to bring together buyers and sellers of securities.” In other words, any platforms that facilitate digital asset exchange or swaps.
Paradigm argues that DEXes neither serve as intermediaries nor have an “organization, association, or group of
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