The U.S. Securities and Exchange Commission (SEC) has been in the process of finalizing a regulation proposal aimed at extending its jurisdiction over various segments of the cryptocurrency space. This proposed rule sought to include digital asset businesses under the umbrella of trading venues that require registration. However, Acting Chairman Mark Uyeda is reconsidering this initiative, signaling a potential shift in the SEC’s approach to cryptocurrency regulation.
This rule, which has been in development for several years, is currently awaiting finalization at the agency. Yet, Uyeda has recently requested SEC staff to halt further progression on this specific proposal. He pointedly remarked, “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.” These comments were set to be delivered at the Institute of International Bankers in Washington.
Uyeda highlighted the substantial negative feedback received regarding the definition of an exchange, particularly in relation to cryptocurrency. In light of this public response, he has asked SEC staff to explore options for abandoning the part of the proposal that relates to cryptocurrency exchanges. This represents a noteworthy departure from the previous administration’s stance on crypto regulation.
For further reading on the implications of this proposal, you can refer to the article discussing the industry’s concerns about the SEC’s attempts to regulate decentralized finance (DeFi) within the context of broader exchange rules. Read More.
Particularly contentious was the SEC’s effort to identify exchanges within its jurisdiction by including certain “communications protocols.” Uyeda pointed out that the initial proposal could have inadvertently encompassed various protocols commonly used in cryptocurrency transactions, raising concerns about overreach.
This rule proposal formed part of a suite of regulations put forth during the tenure of former chair Gary Gensler, whose aggressive regulatory stance on cryptocurrency was met with mounting criticism. The changing leadership, empowered by President Donald Trump, has ushered in a new perspective on crypto regulation, exemplifying a shift toward a more measured approach.
