The U.S. Securities and Exchange Commission (SEC) is stepping back from plans to force crypto companies to register as exchanges. Acting Chairman Mark Uyeda announced the decision during a speech at the Washington Conference of the Institute of International Bankers on March 10.
Uyeda said he asked SEC staff to find ways to abandon part of a proposed rule that expanded regulations on “alternative trading systems” (ATS). Under this rule, some crypto platforms would have been required to register officially as exchanges.
Why the SEC Proposed This Rule Initially
The SEC first introduced this rule in 2020 under former Chairman Jay Clayton. Originally, the rule aimed to clarify regulations for platforms trading U.S. government securities, like Treasury bonds. These platforms, known as Alternative Trading Systems, are similar to exchanges but typically face lighter regulations.
However, in 2022, former SEC Chairman Gary Gensler expanded the scope of the rule. Gensler’s version broadened the definition of an “exchange” to include platforms and communication protocols used by crypto firms. Many in the crypto community criticized this expansion, saying the new rule lacked clear definitions and imposed confusing requirements.
Why Acting Chairman Uyeda Wants to Withdraw the Rule
Acting Chairman Uyeda believes the expanded crypto regulations were misguided. He stated the commission received extensive negative feedback on this part of the proposal. Uyeda described linking Treasury market regulations to crypto regulation as a mistake.
“In my view, it was a mistake for the commission to link regulation of the Treasury markets with a heavy-handed attempt to tamp down the crypto market,” Uyeda explained during his speech.
Uyeda pointed out that Gensler’s rule went beyond the original intention of regulating government securities platforms. He criticized the rule’s vague language, particularly the unclear definition of “communication protocols,” which led to uncertainty for crypto companies.
SEC Changes Approach to Crypto Regulation After Gensler’s Exit
Gary Gensler’s tenure as SEC chairman was marked by strict oversight of the cryptocurrency industry. Between 2021 and his resignation on January 20, 2025, Gensler initiated over 100 enforcement actions against crypto firms. His departure coincided with former President Donald Trump’s return to office, fulfilling a promise Trump made to remove Gensler for his harsh stance on crypto.
Since Gensler’s resignation, the SEC has noticeably softened its approach. Recent weeks have seen the dismissal of several high-profile cases against crypto companies. These include dismissals involving crypto exchange Gemini on Feb. 26, Kraken on March 3, and Cumberland DRW on March 4.
As part of its new direction, the SEC launched a special crypto task force . This task force, led by crypto-friendly Commissioner Hester Peirce, aims to develop clearer regulations for digital assets. Peirce is known in the crypto community for advocating fair and transparent rules rather than aggressive enforcement actions.
