The U.S. Securities and Exchange Commission has invited public feedback on what counts as an ”exchange” in the light of DeFi crypto platforms performing similar trades as a stock exchange. The SEC considers decentralized platforms as similar to an exchange, and thus aims to extend its regulatory framework to DeFi services.
There are several ways to trade or buy and sell cryptocurrencies, and DeFi is a very popular service where the risk of hacking is not present as it is with centralized crypto exchanges. A DeFi platform, or liquidity serviced work unhindered without the “gatekeepers” like a bank or a central exchange. The SEC rules also too do not exactly fit with digital asset trades, as a cryptocurrency still has an ambiguous nature that first needs to be defined.
As per media reports, SEC considers some of the existing DeFi services as exchanges that come under its regulatory framework. Thus the current exercise is to finalize a definition of what an exchange is so as to include Defi services, and especially the use of communication protocols for creating quotes.
Crypto trading platforms consider the exercise a mission to constrain DeFi services and throttle innovative technologies with centralization.
In another development, the London Stock Exchange Group (LSEG.L) has entered regulated bitcoin index F&O service after partnering with GFO-X. This will be Britain’s first bitcoin index derivative trading service. Britain had earlier invited public opinion on forming regulations for crypto or digital assets. GFO-X has a license from UK’s Financial Conduct Authority. The service will utilize the exchange’s Paris clearing unit, and the service is expected to begin fourth quarter this year after approval from European regulators.
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