The U.S. Securities and Exchange Commission has proposed narrowing Rule 15c2-11, the broker-dealer reporting rule that has long governed public information for over-the-counter (OTC) quotes. Adopted in 1971 to curb fraud in penny stocks, the rule requires broker-dealers to ensure current public information about an issuer before publishing OTC quotations.
In 2021 the SEC interpreted the rule to cover fixed-income instruments, including government and corporate bonds. That expansion prompted market pushback and raised questions about whether the rule might also apply to crypto assets. In a recent proposal, the agency would limit the rule’s reporting obligations to ‘equity securities,’ effectively reversing the 2021 interpretation.
Commissioner Hester Peirce, who leads the SEC’s crypto task force, praised the proposed change. She noted that although the rule’s text uses the broad term ‘security,’ market participants historically treated it as an OTC equity rule. Peirce criticized the SEC’s approach after 2020, saying the agency issued a series of short-term, limited no-action reliefs instead of granting longer-term relief while it reassessed the rule’s reach, which caused prolonged uncertainty for market participants.
Under the proposal the agency defines an equity security to include stocks, similar securities, and convertible instruments that represent ownership interests in a company. The SEC has not yet decided whether that definition could include certain crypto assets and has opened a 60-day public comment period to gather input. Peirce specifically encouraged comments on how to define ‘equity security,’ whether and how the rule should apply to crypto, and what next steps should be taken about creating an ‘expert market.’
The proposal arrives amid broader efforts to clarify crypto regulation in the United States. The SEC and the Commodity Futures Trading Commission recently signed a memorandum to coordinate oversight of financial markets, including crypto, aiming to reduce longstanding jurisdictional disputes between the agencies.