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Bit News HQ

ConsenSys Challenges SEC: Calls for DeFi Exclusion from Exchange Definition

Bitnewshq Staff by Bitnewshq Staff
February 27, 2025
in Market News
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ConsenSys Challenges SEC
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The Blockchain company ConsenSys is girded for battle against a U.S. Securities and Exchange Commission (SEC) rule that could have ramifications for Decentralized Finance (DeFi) platforms. The company requested that the agency’s Crypto Task Force and SEC Commissioner Hester Peirce remove the proposed changes in a letter the company recently sent to the regulator.

What’s the Issue?

DeFi platforms are falling under the SEC’s crosshairs and it wants to expand the definition of an “exchange.” An exchange is a centralized place where people trade securities and stock are generally traded there normally. However, unlike DeFi platforms, they rely on smart contracts and peer-to-peer transactions.

ConsenSys is arguing that the SEC’s plan goes too far. The company argues DeFi does not belong in the traditional exchange mold and should not be regulated the same. It also argues that this rule would hinder blockchain innovation and limit how DeFi platforms are able to operate in the U.S.

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Legal and Constitutional Concerns

ConsenSys says the SEC is going beyond its allowed scope when it changes the meaning of an exchange without proper legal authority. The company claims the rule could infringe on the US Constitution, particularly the First and Fifth Amendments, in the way that the rule would control blockchain based platforms to the point of curbing free speech and property rights.

This rule was spoken out in 2022 against by many people and businesses in the crypto space, but still the SEC is moving forward. The agency should listen to the concerns of the blockchain businesses before making any final decisions, ConsenSys stated.

Possible Impact on Crypto and DeFi

If DeFi platforms are regulated as per the SEC proposal, they may find it difficult to operate as the regulations may be too strict for them to survive. In fact, some may even quit the U.S. to bypass such issues.

There is however hope that with recent leadership changes in the U.S. government crypto friendly policies may come through. Meanwhile, lawmakers like Senator Cynthia Lummis are also questioning the SEC’s approach and calling for clearer, fairer regulations.

Digital assets are the future. The U.S. can either pave the way or fall behind.

I lead my colleagues to seek clarification from the SEC on digital asset ETP staking restrictions to make U.S. asset managers competitive in the global market. ⬇️ pic.twitter.com/Fk8RjaB8LC

— Senator Cynthia Lummis (@SenLummis) February 21, 2025

For now, ConsenSys will hold its ground and ask the SEC to reconsider its position and protect the future of blockchain innovation.

Also read: Ripple vs SEC: Court Sets April 16, 2025 Deadline for XRP Lawsuit

Bitnewshq Staff

Bitnewshq Staff

At BitNewsHQ, we’re a team of passionate writers and crypto enthusiasts who live and breathe blockchain and digital assets. Our goal is to bring you accurate, up-to-date news and insights without any bias—just the facts. This article was crafted with care by our dedicated team to keep you informed and ahead in the world of crypto.

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