On Wednesday, the U.S. Securities and Exchange Commission (SEC) published proposed rule changes related to the Alternative Trading Systems (ATS). However, a surprise inclusion is the suggested change to the definition of an “Exchange”. It proposes to cover systems that include “communication protocols to bring together buyers and sellers of securities.”
Some in the crypto community are concerned that this might include automated market makers and DeFi protocols. But given that the definition applies to buyers and sellers of securities, these crypto commenters acknowledge that DeFi protocols deal with securities, as the SEC has claimed.
The review of ATS rules is substantially driven by issues in the $22 trillion U.S. Treasury market as well as the related repo markets. However, the change to the definition of an exchange is intentionally not limited to these markets. SEC Chair Gensler said he supported the change to the “definition of an exchange to cover platforms for all kinds of asset classes that bring together buyers and sellers.”
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