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SEC strengthens regulation of liquidity providers in the crypto industry

Regulation: SEC strengthens regulation of liquidity providers in the crypto industry

The US Securities and Exchange Commission (SEC) has introduced new rules aimed at overseeing liquidity providers in the crypto industry.

These rules include updated definitions of the terms "dealer" and "government securities dealer," giving the SEC broader authority and increased oversight over the cryptocurrency and #decentralised finance (DeFi) sectors.

As part of these rules, certain market participants, particularly those providing liquidity of more than $50 million to #automated market makers, are now required to register with the SEC, join a self-regulatory organisation and comply with regulatory obligations.

However, the SEC's proposal has been criticised by various members of the crypto industry, including the Blockchain Association and DeFi Education Foundation.

In an open letter, they called the new rules "misguided and unworkable." Their concerns are primarily related to the lack of clarity in the definition of a market dealer and unresolved issues related to DeFi protocols.

Despite the criticism, SEC Chairman #Gary Gensler emphasised the need for these innovations to protect investors and ensure compliance in the face of the growing prevalence of algorithmic trading.

The SEC's new rules will take effect 60 days after publication in the Federal Register and will remain in effect for one year. The decision underscores the SEC's commitment to strengthen its oversight of the rapidly evolving digital asset market and DeFi sector, despite resistance and criticism from industry participants.

These measures are expected to have a significant impact on the future development of the cryptocurrency market and its regulatory practices.

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