ConsenSys Challenges SEC's Crypto Power Grab

The U.S. Securities and Exchange Commission (SEC) has been making strides in shaping a more crypto-friendly landscape, but significant work remains. In a recent development, ConsenSys, a prominent blockchain firm, submitted a formal appeal to the SEC, urging the removal of proposed amendments that redefine "exchange" under U.S. securities laws. The firm argued that this change would be catastrophic for the industry and exceed the SEC's authority.

The ongoing dispute began in 2022 when the amendment was first introduced. The amendment aimed to grant the regulatory body authority over decentralized finance (DeFi) platforms. ConsenSys contends that this amendment would allow the SEC to exercise unnecessary authority over these platforms, potentially contradicting the Administrative Procedure Act and the U.S. Constitution.

ConsenSys claims that the amendment would alter the functioning of exchanges, enabling the state to tax and monitor every transaction. This would further the culture of asset surveillance and restrict investors, potentially discouraging participation in the crypto landscape. The firm also argues that the amendment would stifle innovation and impose strict compliances, driving blockchain firms out of the country and undermining the SEC's plan to make America a crypto capital.

One of the main points of contention raised by ConsenSys is the lack of a cost-benefit analysis by the SEC. The firm asserts that the SEC has not considered the number of parties affected by the ruling, which would not only impact exchanges but also validators and software developers. ConsenSys maintains that this amendment is not viable for the current state of the crypto landscape. As of now, the SEC has not publicly responded to ConsenSys' appeal.