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SEC proposal could remove crypto from OTC reporting requirements

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SEC proposal could remove crypto from OTC reporting requirements

The U.S. Securities and Exchange Commission has put forward a proposal which, according to SEC commissioner Hester Peirce, could help clear up years of confusion around how a key broker-dealer rule applies across markets.

Summary

  • SEC has proposed limiting Rule 15c2-11 to equity securities, reversing its broader 2021 interpretation that raised questions for crypto assets.
  • A 60-day public comment period has been opened as regulators seek feedback on how the rule should apply and whether crypto falls outside its scope

On Monday, the SEC proposed an amendment to Rule 15c2-11 that would limit reporting requirements for broker-dealers in the over-the-counter market to equity securities only, effectively reversing the broader interpretation introduced in 2021.

The SEC Rule 15c2-11 was first introduced in 1971 to ensure broker-dealers maintain up-to-date issuer information before they can publish over-the-counter quotes.

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By placing obligations for firms to review and maintain current information about an issuer, the rule was designed to reduce risks in thinly traded markets, particularly in penny stocks.

Without this information, a broker-dealer is not allowed to initiate or resume quotations for a security in OTC markets.

However, the rule was reinterpreted in 2021 to extend beyond equities into other asset classes, and as a result, there have been questions around whether it can apply to crypto assets if they are classified as securities.

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The SEC’s proposal would limit the rule’s scope to equity securities.

As such, broker-dealers won’t be required to apply these reporting requirements to crypto assets, even in cases where questions around their classification as securities remain unresolved.

This could make it easier for broker-dealers to support crypto trading and quote digital assets without having to rely on disclosure standards that do not align with how these assets function.

A public comment period has been opened where the commission is seeking feedback on whether the definition of equity securities should extend to crypto assets and how the rule should apply going forward.

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According to Commissioner Peirce, who also leads the agency’s crypto task force, the proposal could help address confusion created by the earlier 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,”

However, it must be noted that there is still no final decision on whether “equity securities” could include crypto assets.

Peirce said she would closely watch “questions about the definition of ‘equity security,’ the rule’s application to crypto assets, and the appropriate next steps with respect to the formation of an ‘expert market.’”

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Crypto World

Bitcoin Bulls Risk Getting Trapped at Six-Week Highs

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Bitcoin Bulls Risk Getting Trapped at Six-Week Highs

Bitcoin (BTC) risks turning its rebound into a classic “bull trap” as the price rejects at strong resistance.

Key points:

  • Bitcoin faces flat Coinbase spot demand and an open interest divergence as prices rise above $75,000.

  • This risks ending the rebound due to structural weakness, analysis warns.

  • Any push higher toward $80,000 will be “challenging.”

BTC market lacks “spot buying support”

New research from onchain analytics platform CryptoQuant released on Tuesday warns that the recent BTC price rebound may collapse.

“The Bitcoin market is currently exposing a critical structural vulnerability as it transitions from a healthy spot-led regime to an overheated rally driven primarily by derivatives,” contributor Easy On Chain wrote in a QuickTake blog post.

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Several factors support the theory, including the Coinbase Premium Index — the difference in price between Coinbase’s BTC/USD and Binance’s BTC/USDT pairs. 

Despite BTC/USD hitting six-week highs, the index continues to dip into negative territory, pointing to a lack of US spot demand.

“In this absence of spot-buying support, we are witnessing an extreme decoupling between investor cohorts where smart money is tactically distributing its supply,” Easy On Chain continued.

Bitcoin Coinbase Premium Index. Source: CryptoQuant

Fellow CryptoQuant contributor MAC_D agreed, drawing a clear distinction between old and new investors.

“Recent on-chain data shows that OG investors are distributing, while new investors are entering the market, indicating a clear transfer of ownership,” they wrote in a separate Quicktake post.

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The core issue, however, is with open interest (OI), which shows the market in a precarious situation.

“On the 1-hour timeframe, a divergence between price and open interest is emerging. While the spot market shows strength, futures traders appear reluctant to take on additional risk,” MAC_D continued. 

“If this lack of bullish positioning in the futures market continues, the current move could turn into a bull trap.”

Bitcoin OI chart. Source: CryptoQuant

Bitcoin price upside will be “challenging”

As Cointelegraph reported, Bitcoin faces a wall of selling pressure in the mid-$70,000 zone, which coincides with old local lows from April 2025.

Related: $58K BTC price still in play? Five things to know in Bitcoin this week

Data from CoinGlass shows price stalling midway through that ask-liquidity at $76,000 before reversing.

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BTC liquidation heatmap. Source: CoinGlass

Market participants thus remain level-headed when it comes to a broader market recovery. 

In his latest X analysis, Keith Alan, cofounder of trading resource Material Indicators, referenced various moving average (MA) trend lines and proprietary trading tools to put the odds of a full bull-market comeback in context.

“Bulls are currently attempting to flip resistance at the Q2 2024 Timescape Level, and now psychological resistance at $75k is coming into focus. If bulls can push higher the next targets are at the Q2 2025 Timescape Levels at $78.3k and $82.5k,” he explained.

“The confluence between the moving averages, Timescapes Levels and the structure add strength to those levels, and there is a lot of ask liquidity laddered between here and there that will make that move challenging.”

BTC/USD one-week chart. Source: Keith Alan/X

Trader Mister Crypto, meanwhile, drew comparisons between current price action and that from earlier in 2026, where BTC/USD offered a relief bounce before breaking below support.