SEC Commissioner Hester Peirce warned that layer-2 blockchains operating centralized matching engines may face exchange registration requirements while advocating for regulatory protection of truly decentralized protocols.
During an interview on The Gwart Show, Peirce noted her vision for crypto regulation, drawing sharp distinctions between immutable code operating on decentralized networks and centralized entities using blockchain technology to facilitate trading.
Decentralized protocols cannot be owned
The head of the SEC’s Crypto Task Force views protocols as sets of rules that cannot be owned, stating “nobody owns” a truly decentralized protocol because “it’s out there and anyone can use it.”
Layer-2 solutions introduce regulatory complexity, as they often centralize transaction ordering to address Maximum Extractable Value (MEV) issues.
These chains run matching engines that control transaction sequencing, departing from the distributed node architecture that defines
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