The U.S. Securities and Exchange Commission (SEC) has moved to amend a long-standing broker-dealer rule, a shift that could significantly clarify the regulatory landscape for the digital asset market. On Monday, the commission proposed an amendment to Rule 15c2-11 that would strictly limit its reporting requirements to equity securities. The move effectively seeks to reverse a controversial 2021 interpretation that had expanded the rule’s scope, creating widespread uncertainty for firms handling cryptocurrencies.
Originally introduced in 1971, Rule 15c2-11 was designed to protect investors in thinly traded “penny stock” markets. It mandates that broker-dealers maintain and review up-to-date information about an issuer before publishing quotes in the over-the-counter (OTC) market. Without this verified data, firms are prohibited from initiating or resuming quotations. While the rule functioned for decades as an equity-focused safeguard, the 2021 reinterpretation applied it to broader asset classes, leading many to fear that crypto assets—if classified as securities—would be subject to disclosure standards that do not align with their technical nature.
The new proposal aims to provide a reprieve by narrowing the rule’s application back to traditional equity securities. Under this framework, broker-dealers would not be required to apply these specific reporting hurdles to crypto assets, even in instances where the legal classification of a token remains a point of contention. Industry analysts suggest this change could make it substantially easier for platforms to support crypto trading and provide liquidity without the risk of violating rules designed for 20th-century corporate stocks.
SEC Commissioner Hester Peirce, who leads the agency’s crypto task force, welcomed the proposal as a way to resolve years of industry confusion. Discussing the shift, Peirce noted, “By its terms, the text of Rule 15c2-11 always has applied to quotations of a ‘security.’ Market participants and other observers including me, however, understood the rule to apply only to quotations of over-the-counter (‘OTC’) equity securities.” Her comments highlight a long-standing divide within the commission regarding how legacy financial laws should be adapted for the digital age.
Despite the move toward clarity, the SEC has not yet reached a final determination on whether the term “equity securities” could eventually be interpreted to include certain crypto assets. To address this, the commission has opened a 60-day public comment period, specifically seeking feedback on the definition of equity securities and how the rule should function in an evolving market. This period will allow stakeholders to weigh in on whether crypto should fall entirely outside the rule’s scope or if a new “expert market” structure is necessary.
Commissioner Peirce indicated she would be paying close attention to the public’s response, particularly regarding the rule’s application to digital assets and the next steps for market formation. As the 60-day window begins, the crypto industry and traditional broker-dealers alike are expected to lobby for a permanent exclusion, arguing that the 1971-era disclosure requirements are a poor fit for the decentralized and transparent nature of blockchain-based assets.
