SEC Seeks Public Comment on Crypto Handling in OTC Broker-Dealer Rule

The US Securities and Exchange Commission is moving to reduce years of ambiguity around a broker-dealer reporting rule that had limited which assets could be quoted on the over-the-counter (OTC) market. Rule 15c2-11, originally adopted in 1971 to curb penny-stock fraud, requires broker-dealers to keep current public information about a listed issuer before publishing quotes. In 2021, the rule was reinterpreted to also cover fixed-income securities, a shift that drew backlash from market participants and raised questions about crypto securities. In a Monday statement, the SEC proposed an amendment to limit the rule’s scope to equity securities, effectively reversing the 2021 interpretation. The move arrives amid a broader regulatory push to clarify how crypto assets fit within traditional market structures.

Hester Peirce, a commissioner who leads the SEC’s crypto task force, welcomed the proposal and argued that the commission had created years of uncertainty through a 2020 amendment and its 2021 application. She noted that, by the letter of Rule 15c2-11, the rule has always applied to quotations of a “security,” but market participants and observers understood it to cover only OTC equity securities. The commissioner stressed that long-term relief should have been granted while the agency assessed whether extending the rule to fixed income was appropriate and amended the rule as needed. Instead, she said, the commission issued several rounds of limited relief—often lasting only a few months—fostering ongoing uncertainty in the market.”

Key takeaways

• The SEC proposes narrowing Rule 15c2-11's reporting obligations to equity securities on OTC markets, reversing the 2021 interpretation that extended it to fixed-income assets.


• The agency has opened a 60-day public comment period to gather feedback on how “equity securities” should be defined and whether crypto assets might fall under that category.


• The proposal highlights the commission’s intent to reduce regulatory ambiguity that has affected market participants and product development, including crypto-related offerings.


• Regulators including the SEC and CFTC have been signaling a broader drive to align crypto oversight with traditional markets, as evidenced by recent coordination efforts.


• The discussion includes questions about the potential creation of an “expert market” and how crypto assets could be treated within that framework.

Tickers mentioned: $BTC, $ETH, $COIN

Market context: The proposal comes amid a broader US regulatory push to bring crypto markets into clearer regulatory alignment. By seeking public input on whether crypto assets might be treated under the equity-security framework, the SEC signals a path toward greater certainty—while leaving open how crypto securities would be defined within an updated interpretation of “security.” The move follows a recent memorandum between the SEC and the CFTC aimed at coordinating oversight of financial markets, including crypto, with the aim of reducing regulatory turf wars between the agencies.

Why it matters

The SEC’s proposal addresses a longstanding friction point for market participants that rely on OTC quotes. By narrowing the scope to equity securities, the agency signals that the reporting requirements may not automatically extend to other asset classes, including crypto-related instruments, unless they are clearly defined as securities under existing frameworks. This could reduce the compliance burden for issuers and broker-dealers dealing in non-equity assets on the OTC platform, while also sharpening the framework for evaluating crypto offerings that may seek to register or quote under traditional market channels.

The move also reflects a broader regulatory stance under the current administration to bring crypto markets under clearer governance. A 60-day public-comment period will let industry participants, exchanges, and other stakeholders weigh in on how to interpret “equity security” and whether crypto assets could be included in that category. As the sector continues to evolve with tokenized assets and new fundraising structures, the SEC is signaling that it intends to refine statutory boundaries rather than rely on ad hoc relief measures that can create market fragmentation.

Beyond the technical interpretation of Rule 15c2-11, the development sits within a larger regulatory dialogue. The SEC and the CFTC have moved toward coordination to supervise financial markets more coherently, including crypto activities. This alignment could shape how future disclosures, investor protections, and market access rules are applied to a wide range of digital-asset offerings, potentially smoothing pathways for compliant token projects or raising the bar for those that fall outside established securities laws.

What to watch next

• 60-day public comment window: Stakeholders should monitor the closing date for formal feedback and any subsequent agency responses or revisions to the proposal.


• Definition of equity security: Watch for clarifications on what constitutes an equity security and how that definition could encompass or exclude crypto assets.


• Crypto asset applicability: Assess whether the SEC will provide further guidance on crypto securities and the criteria for including crypto assets within the scope of Rule 15c2-11.


• Regulatory coordination: Look for developments in the SEC–CFTC coordinated framework and any new guidance on how the two agencies will supervise crypto markets together.

Sources & verification

• SEC press release: Proposes amendments to Exchange Act Rule 15c2-11 (https://www.sec.gov/newsroom/press-releases/2026-28-sec-proposes-amendments-exchange-act-rule-15c2-11)


• SEC speech by Commissioner Hester Peirce on Rule 15c2-11 (https://www.sec.gov/newsroom/speeches-statements/peirce-nal-rule-15c2-11-2021-09-24)


• SEC and CFTC coordination memorandum concerning regulatory oversight of financial markets, including crypto (https://cointelegraph.com/news/sec-cftc-sign-memo-regulate-markets-harmony)

Regulatory update on OTC quotes and crypto implications

The proposed amendment to Rule 15c2-11 represents a recalibration of how the SEC views the intersection of OTC quotation practices and the evolving crypto landscape. While the agency has not irrevocably defined crypto assets as equity securities, the public-comment process will illuminate whether and how the current rule could be extended or adapted to cover crypto instruments that exhibit ownership rights or other features typically associated with securities. In the meantime, market participants should prepare for a potential shift in disclosure requirements for OTC quotations, particularly as new crypto-native products and token offerings seek broader access to traditional market venues.

Related: SEC-CFTC coordination on crypto markets

What the proposal changes for market participants

For broker-dealers and issuers involved in OTC quotations, the narrowing focus to equity securities could ease compliance burdens for non-equity instruments, as long as those assets fall outside the defined scope of “equity security.” However, the public-comment period also invites scrutiny of whether the definition is sufficiently robust to address crypto assets that exhibit security-like characteristics. The commission’s emphasis on a precise, demonstrable ownership or equity-like interest could shape how new crypto projects consider their disclosure strategies before pursuing otc quotation or listing arrangements.

The dialogue underscores a deeper aim: to balance investor protection with market accessibility. By refining when and how assets can be quoted on OTC platforms, regulators aim to reduce unnecessary friction while maintaining transparent information flows that help investors make informed decisions. In the longer term, this could influence token issuers’ strategies for capital formation, exchanges’ quotation policies, and the overall risk profile of OTC markets that have historically served as a bridge between private offerings and public markets.

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