DeFi Advocates Push Back Against SEC Regulation Plans

The DeFi Education Fund (DEF) has submitted a letter to the Securities and Exchange Commission (SEC), outlining its stance on the regulation of decentralized finance protocols. The advocacy group argues that non-custodial applications, such as Automated Market Makers (AMMs) and smart contracts, should not be regulated as exchanges.

The DEF claims that these types of applications do not meet the legal definition of an intermediary or exchange, and therefore should not be subject to the same regulatory burdens. In fact, classifying developers as intermediaries would place an overwhelming regulatory burden on them, according to the advocacy group.

SIFMA, a TradFi umbrella group, has recently argued that the SEC should regulate AMMs and other DeFi platforms based on their functions in supporting tokenized securities trading. However, SIFMA's stance is at odds with the DEF's position, which holds that regulation should be technology-neutral and based on market function rather than protocol architecture.