Do you consider a crypto platform or service to be "a system that offers protocols and the use of non-firm trading interest to bring together buyers and sellers of securities"? If so, then the SEC's new proposed rulemaking regarding Regulation ATS merits your attention. The 654-page proposal, which does not mention crypto, arguably includes a definition that may include certain crypto services. Commissioner Peirce, in dissenting from the proposed rule, noted this possibility. Once the rule is published in the Federal Register, the public will have only 30 days to provide comments. The SEC over the past year has significantly shortened the comment period for its rules, making it more difficult for the public to review and provide meaningful comment. If you want to make a meaningful comment to this or any other rulemaking, act quickly and consider:
- providing specific data to the agency about the impact such a regulation (or a broad interpretation of such a regulation) could have on your company or in the industry in which you operate;
- providing a legal analysis of how the language should be properly interpreted (including recent cases dealing with the definition of exchange, such as this recent case from the D.C. Circuit); and/or
- providing viable alternatives to the language or structure of the proposal that would achieve benefits for both the industry and the agency. Well-reasoned and substantive comments must be addressed by the agency in its final rule.
If comments articulate well-reasoned bases for how this rule may adversely impact the crypto industry, the SEC will be required under administrative law principles to provide a response, potentially providing some clarity to some of the SEC rules of the road for crypto. Comments to this proposed rule may be submitted here.
A final message to those who operate any service that is designed to facilitate any communication between potential buyers and sellers of any type of security: Read this release. Even if you have nothing to do with government securities or even fixed-income, or with traditional securities, read this release. Preferably as soon as it is published on the Commission's website. It covers a lot of ground, and you should not assume that it has nothing to do with you, because it probably does.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.