Category: News, NFT News

SEC Expands Definition For ‘Securities Dealer’ To Include DeFi Market Makers

Liquidity providers commanding more than M in assets must register with the SEC under the new rules.

The United States Securities and Exchange Commission is ramping up its attack on DeFi, with the regulator broadening its definition for financial “dealers” to encompass large DeFi liquidity providers.

On Feb. 6, the SEC passed two new rules expanding the definition of a financial securities dealer with three votes in favor versus two votes against. The new rules expand the definition of “regular business” activities to classify all liquidity providers commanding at least $50M worth of assets deemed to comprise securities as “dealers,” including entities operating on decentralized crypto exchanges.

“The commission is not excluding any particular type of securities, including crypto asset securities, from the application of the final rules,” the SEC said. “If anyone trades in a manner consistent with de facto market making, [they] must register with us as a dealer.”

The SEC now defines a digital asset dealer as a person engaged in “a regular pattern of buying and selling crypto asset securities that has the effect of providing liquidity to other market participants.” However, liquidity providers commanding less than $50M in assets are exempt from the rule.