Paradigm Accuses SEC of Wanting the Impossible from Coinbase
American venture capital company Paradigm has published a message. And it is not something the SEC will be too keen to hear.
Paradigm, which describes itself as a research-driven technology investment firm, has published a comment on the US Securities and Exchange Commission's (SEC) decision to propose redefining the term “ exchange”.
Dubbing it a hazardous rulemaking, the company says that the SEC “inappropriately attempts to bring crypto trading platforms, including DEXs, under its remit and regulate them as securities exchanges.”
It goes on to state that the SEC appears to be wanting to force DEXs into the same Hobson’s choice, i.e. a fake free choice in which only one thing is actually offered.
They add that the SEC already has a track record of demanding that Coinbase register as a securities exchange even though it was impossible at the time.
“As our comment letter highlights, the SEC’s rulemaking proposal veers far outside the SEC’s statutory jurisdiction and violates the Administrative Procedure Act, a key law that protects the American public against autocracy and bureaucratic whim—it should therefore be promptly withdrawn,” the statement reads.
The company also explains the difference between DEXs and traditional exchanges. It says that DEXs lack critical features of the exchange’s definition.
“A DEX, particularly one using automated market maker mechanisms, involves no person intermediating transactions between buyers and sellers—instead, it uses an algorithm to balance pools of crypto assets that potential buyers or sellers can freely access,” the authors write.
They add that DEX is not run by any entity that can have collective action. Instead, it relies on a self-executing code that is often immutable.
The company goes on to state that the SEC’s attempt to redefine the term exchange is “capricious” to such an extent that it may end up encompassing services like Bloomberg’s messaging service.
All in all the moves, according to the authors, are “fatally flawed on the merits and procedural grounds” and must be thus shelved.
Previously, GNcrypto reported about the Web3 development.
