Famous Blockchain Firm Has Exposed SEC’s Archaic Stance On Crypto

SEC has made some decent headways in reshaping the landscape into more crypto-friendly. However, it seems like a lot of work still needs to be done. A few hours back, Consensys submitted a formal appeal to the U.S. Securities and Exchange Commission or SEC to remove proposed amendments to redefining “exchange” under U.S. securities laws. The firm argued that this would be catastrophic for the industry and that the change would overreach its authority gravely.  

Today, @Consensys submitted a paper to @HesterPeirce's @SECGov crypto task force respectfully requesting the pending rulemaking which amends the definition of “exchange” under U.S. securities laws to apply to DeFi be removed from the regulatory agenda. Our view is that the rule… pic.twitter.com/lwaePsJCW4

— Bill Hughes : wchughes.eth 🦊 (@BillHughesDC) February 21, 2025

This ongoing debacle started in 2022 when the amendment was first introduced. The amendment allowed the regulatory body to exercise its authority over decentralized finance or DeFi platforms. The amendment was received poorly even back then. Consensys argues that this would allow the regulatory body to exercise unnecessary authority over the platform. In fact, this amendment would also contradict the Administrative Procedure Act and the U.S. Constitution itself.  

The Impact On The Blockchain 

Consensys has claimed that the amendment would change the very functioning capabilities of exchanges, where the state will tax and monitor every transaction. Therefore, it will further the culture of asset surveillance of the state and would make investors feel restricted.  This can be detrimental and discouraging for people.  

The firm also argues that the amendment would stifle innovation and impose strict compliances on the landscape as a whole. Therefore, closing the system considerably. As a result, driving out blockchain firms out of the country and settling elsewhere. Therefore, it can stop the SEC’s plan to turn America into a crypto capital. 

One of the biggest points of contention provided by Consensys is that the organization did not conduct a cost-benefit analysis of the matter. As per the firm, the SEC never factored in the number of parties affected by this ruling. The amendment would not just affect exchanges but will also affect validators and softwar developers as well. Hence, Consensys argues that this amendment is not viable for the state of the crypto landscape. As of now, the SEC has not presented their view on the matter.