The U.S. Securities and Exchange Commission wants to expand how it determines which exchanges to regulate. Its inbox has been flooded with letters from the crypto industry accusing the SEC of going beyond its legal authority and imposing rules on services that platforms require, like electric companies.

In April, the SEC rewrote its exchange proposal to include decentralized finance into the exchange world. The agency argued that an updated rule will help modernize securities regulators’ approach to changing markets. The SEC has set a deadline of Tuesday for public comments.

Crypto industry lobbyists and advocates argue that if the new rule is finalized, it would violate the First Amendment right of coders. It would also double down on the SEC’s continuing error in not treating this sector as a new one.

The DeFi Education Fund wrote in a comment letter that the proposal would act as a blanket banishment of DeFi. The actions and words of both the Commission and Agency personnel have caused great confusion.

According to the agency’s proposal, protocols that bring buyers and sellers together – called communication protocol systems — now play a role similar enough to that of exchanges to warrant regulation as such.

When the SEC released the latest version in April, Gary Gensler said that investors in crypto markets should receive the same protections as those provided by securities laws in other markets.

According to a letter from the DeFi Education Fund, DeFi protocols do not “intuitively” possess any of the hallmarks that define stock exchanges. The proposal of the commission goes beyond DeFi and would include utility and third-party service providers that contract with exchange providers in the exchange regulatory regime.

The group said that this could bring in key services from outside the SEC, like messaging services and utility companies who provide electricity to platforms.

Paradigm, a crypto investment firm, defended decentralized exchanges that do not have the centralized management securities regulations are used to.

The company said that the SEC enforcement actions, which accused Coinbase of operating an illegal exchange, was a good example of the intention of the commission to force DEXs to make the same Hobson’s choice. The new definition of “exchange” is so broad that it could include entities that are not exchanges.

Coin Center, an organization that supports the cryptocurrency community, has warned against the dangers of this proposal for programmers and publishers, including the possibility that the government might go after coders that advocate political positions.

The Coin Center letter argued that the SEC has a near-unlimited discretion in selecting targets for enforcement. The SEC can easily target open-source software publishers who support the use of the software for political purposes by using the proposed standard.

Read more: SEC Lays its Cards on the table with Assertion that DeFi falls under Securities Rules