The SEC is reportedly planning to drop its attempt to mandate crypto firms to register as exchanges.
Mark Uyeda, who is currently leading the SEC, has asked staff to look into abandoning a regulatory change that would bring crypto firms under the umbrella of alternative trading systems.
The acting head of the SEC has introduced a directive that may put an end to efforts to enforce exchange registration on certain crypto firms.
While speaking at the Washington Conference of the Institute of International Bankers on March 10, acting SEC Chairman Mark Uyeda said he had requested SEC staff to find options for discarding elements of a rule change that would place crypto firms under ATS regulations.
“In light of the significant negative public comment received on the definition of exchange with respect to crypto, I have asked SEC staff for options on abandoning that part of the proposal,” he said.
“In my view, it was a mistake for the commission to link together regulation of the Treasury markets with a heavy-handed attempt to tamp down the crypto market.”
Uyeda stated that former SEC Chairman Jay Clayton introduced the rule in 2020 to provide clearer guidelines for alternative trading systems, primarily focusing on US Treasury market participants.
Gary Gensler, during his tenure as SEC Chair, took the rule in a completely new direction by extending its application beyond ATSs.
“Rather than focusing on the narrow issues relating to Government Securities ATSs, a new iteration of the rule was proposed in 2022 that would redefine the regulatory definition of an exchange,” Uyeda said.
“The new definition of the term exchange included communications protocols without clearly defining what that term meant. Effectively, the vastly expanded definition of an exchange would have picked up various protocols used with respect to crypto assets,” he added.
Gensler’s firm and proactive approach to crypto oversight defined his period at the SEC.
Gensler, who resigned on January 20—the same day Trump began his second presidency—had initiated upwards of 100 regulatory cases against companies starting in 2021.
Trump made it clear that he intended to fire Gensler upon winning the election. With Gensler no longer in charge, the SEC has embraced a more favorable stance on crypto.
The SEC has dropped lawsuits against a growing list of firms. Gemini, Kraken, and Cumberland DRW saw their cases dismissed on February 26, March 3, and March 4, respectively.
Meanwhile, Commissioner Hester Peirce has taken charge of a newly established crypto task force to shape a regulatory framework for digital assets.
