Here is a link to our client alert addressing the SEC’s proposed change to the “exchange” definition, including introduction of the new term “communication protocol system.”
There were zero references to crypto, blockchain, DeFi, or distributed ledger technology in the 654-page proposal. Nevertheless, the proposal makes clear that it applies to “trading any type of security.” SEC leadership, past and present, has repeatedly expressed the view that almost all crypto/tokens/digital assets are securities. This seems to imply, given these views previously expressed by SEC leadership, that the proposed new scope of the exchange definition could encompass certain DeFi protocols for crypto as well as protocols used and offered by centralized crypto exchanges (depending on specific details, of course).