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SEC's Proposed Rules on Blockchain Protocols Criticized for Fatal Flaws and Need for New Legislation

The SEC has reopened the comment period for a proposed set of rules that would classify blockchain protocols as regulated securities exchanges. Critics argue that the proposal is flawed and incompatible with existing regulations and an accurate understanding of blockchain technology.

The proposal places the burden on the blockchain industry to guess the rules correctly, disincentivizes the development of free, open-source software, and raises constitutional concerns regarding speech regulation and bias against the blockchain industry. The SEC's Chair Gary Gensler has been openly hostile towards the blockchain ecosystem, and the proposal could potentially drive market participants out of the U.S.

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