On April 14, 2023, the United States Securities and Exchange Commission (“SEC”) reopened the comment period and provided supplemental information on proposed amendments to Rule 3b-16 under the Securities Exchange Act of 1934 (“Exchange Act”) which defines certain terms used in the definition of “exchange” in Section 3(a)(1) of the Exchange Act..  The reopening is primarily intended to address the significant comments received by the SEC in response to the initial proposal, many of which questioned the proposal’s application to trading systems that enable trading of crypto asset securities.  The reopening comment period will end 30 days after its publication in the Federal Register or June 13, 2023, whichever is later.

Key takeaways:

  • The SEC makes clear that, regardless of the proposal, if an organization, association, or group of persons meets the definition of “exchange” with respect to crypto assets that are “securities,” then it must register as a “national securities exchange” or “alternative trading system” (“ATS”).
  • The SEC believes that decentralized finance (“DeFi”) systems already meet the existing definition of an “exchange” to the extent the crypto assets traded on their platforms are securities.
  • Further, the SEC believes that the “group of persons” operating the DeFi system must determine who should register the “exchange” as a national securities exchange or ATS.
  • This proposal and the reopening of the comment period are unlikely to change the crypto industry perception that seeking a path to registration will lead to enforcement action for crypto firms.

The SEC also is seeking further comment on issues that drew significant reaction from the securities industry more broadly.

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Amy serves as the Co-chair of Baker McKenzie's North American Financial Regulation and Enforcement Practice, which provides our clients with a full range of regulatory advice and enforcement counseling. Amy also serves on the steering committees of the Firm's Global Financial Services Regulatory and Global Financial Institutions Groups. Previously, Amy has served as chief litigation counsel at the US Securities and Exchange Commission's (SEC) Philadelphia regional office and managed a team of lawyers overseeing a wide variety of enforcement matters.


Jennifer L. Klass serves as the co-chair of Baker McKenzie's North America Financial Regulation and Enforcement Practice, which provides clients with a full range of regulatory advice and enforcement counseling. Jen is an experienced financial services regulatory lawyer with particular focus on investment adviser regulation and the convergence of investment advisory and brokerage services. She regularly represents clients before the US Securities and Exchange Commission (SEC), both in seeking interpretative guidance and in managing examination and enforcement matters.


Gavin Meyers is a Counsel in Baker McKenzie's Transactional Practice Group in North America. Gavin is an experienced financial services regulatory lawyer and former FINRA attorney with a focus on representing broker-dealers, investment advisers, FinTech, and digital asset firms and projects on regulatory, enforcement and compliance matters involving US federal and state securities laws, FINRA rules, and federal and state money transmission and payments regulations.