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The Securities and Exchange Commission today reopened the comment period and provided supplemental information on proposed amendments to the definition of “exchange” under Exchange Act Rule 3b-16. The Commission initially proposed the amendments in January 2022 and reopened the comment period in May 2022. The reopened comment period closed on June 13, 2022.
On April 22, 2023, the United States Securities and Exchange Commission (SEC) announced that it is reopening the comment period for the proposed amendments to Exchange Act Rule 3b-16. The agency has also provided supplemental information on the proposed amendments to provide additional context and clarity for stakeholders.
Background
Exchange Act Rule 3b-16 provides an exemption from the registration requirements of the Securities Exchange Act of 1934 for certain communications related to securities offerings. The rule allows issuers and other market participants to communicate with potential investors before and during the offering process without triggering the registration requirements.
In November 2022, the SEC proposed amendments to Exchange Act Rule 3b-16 to update the rule in light of developments in communication technology and market practices. The proposed amendments would, among other things, expand the types of communications that are exempt from the registration requirements and provide more guidance on how the exemption applies to social media and other online platforms.
The Reopened Comment Period
The SEC has decided to reopen the comment period on the proposed amendments to Exchange Act Rule 3b-16 to allow stakeholders to provide additional feedback on the proposed changes. The comment period will be open for 30 days from the date of the announcement.
The SEC’s decision to reopen the comment period reflects its commitment to engaging with stakeholders and ensuring that the proposed amendments are well-reasoned, practical, and responsive to the needs of issuers, investors, and other market participants.
Supplemental Information
Along with the reopening of the comment period, the SEC has provided supplemental information on the proposed amendments to Exchange Act Rule 3b-16. The supplemental information is intended to provide additional context and clarity on the proposed changes and address some of the concerns raised by stakeholders during the initial comment period.
The supplemental information includes guidance on the types of communications that would be exempt from the registration requirements under the proposed amendments, including social media posts, messaging apps, and other forms of digital communication. The SEC has also provided guidance on the use of hyperlinks in exempt communications and how to comply with anti-fraud provisions in the context of exempt communications.
The reopening release reiterated the applicability of existing rules to platforms that trade crypto asset securities, including so-called “DeFi” systems, and provides supplemental information and economic analysis for systems that would be included in the new, proposed exchange definition. The reopening release also requested information and public comment on crypto asset securities trading on such systems and certain aspects of the proposed amendments applicable to all securities.
“I believe this supplemental release will help address comments on the proposal from various market participants, particularly those in the crypto markets,” said SEC Chair Gary Gensler. “Make no mistake: many crypto trading platforms already come under the current definition of an exchange and thus have an existing duty to comply with the securities laws. Investors in the crypto markets must receive the same time-tested protections that the securities laws provide in all other markets. I welcome additional public comment on all aspects of the proposal in light of the information in this supplemental release.”
The public comment period will remain open for 30 days after publication of the reopening release in the Federal Register.
