The US Securities and Exchange Commission has proposed an amendment to a key broker-dealer reporting rule that could carve out crypto assets from requirements originally designed for equity securities.
According to a statement released on Monday, the commission has proposed an amendment to Rule 15c2-11 to limit the scope of reporting requirements for broker-dealers in the over-the-counter market to equity securities only, effectively rolling back the broader interpretation introduced in 2021.
What is Rule 15c2-11?
First introduced and adopted in 1971, Rule 15c2-11 is a Securities Exchange Act provision that governs how broker-dealers can publish quotations for securities in the over-the-counter market.
The rule was designed to address fraud risks in thinly traded markets, particularly in penny stocks, by requiring firms to verify that basic issuer information is publicly available before quoting a security.
At its core, the rule places an obligation on broker-dealers to review and maintain current information about an issuer, including details about its business operations, management, and financial condition.
Without this information being accessible and up to date, a broker-dealer is not permitted to initiate or resume quotations for that security in OTC markets which effectively acts as a gatekeeping mechanism, preventing opaque or potentially fraudulent securities from being actively quoted.
What does it mean for crypto?
For decades, market participants largely understood the rule to apply to equity securities such as common and preferred stock.
However, that long-held understanding was challenged after amendments adopted in 2020 and implemented in 2021 broadened how the rule could be interpreted.
The updated approach opened the door for Rule 15c2-11 to extend beyond equities and into other asset classes, including fixed income instruments, which in turn raised questions about whether certain crypto assets could also fall within its scope if deemed securities.
Many tokens do not have the kind of structured disclosures that traditional public companies provide, making it hard for firms to satisfy the rule’s information requirements.
As a result, some market participants pulled back from quoting or facilitating trades in these assets due to concerns around compliance risk.
The SEC’s latest proposal seeks to draw a clearer boundary by explicitly limiting the rule to equity securities.
By doing so, it signals that the reporting framework under Rule 15c2-11 is not intended to apply to crypto assets, even in cases where questions around their classification as securities remain unresolved.
For the crypto market, the change could make it easier for broker-dealers to support secondary trading activity without needing to rely on disclosure standards that do not align with how most digital assets operate.
It also reduces the likelihood of firms facing enforcement action under a rule that was never designed with decentralised networks or token-based systems in mind.
At the same time, the proposal does not place crypto outside the regulatory perimeter.
The SEC has made it clear that oversight will continue through other mechanisms, particularly in areas related to fraud, market manipulation, and the question of when a digital asset qualifies as a security.
SEC is seeking comments
The commission has opened a 60-day public comment period to gather feedback on whether the definition of equity securities should extend to crypto assets and how the rule should apply going forward.
SEC commissioner Hester Peirce has welcomed the proposal, which she said would help address years of confusion created by the rule’s expanded interpretation.
“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,” she added.
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