SEC to Abandon Earlier Effort to Include Crypto Firms in Regulation

The Securities and Exchange Commission (SEC) may abandon a proposal that would expand regulation of alternative trading systems (ATSs) to include crypto firms.

Speaking Monday (March 10) to a conference of the Institute of International Bankers, SEC Acting Chairman Mark T. Uyeda said he asked SEC staff for options on abandoning that part of a proposal related to regulatory changes for Government Securities ATSs, according to remarks released by the SEC.

Uyeda said in his remarks that he did so “in light of the significant negative public comment received on the definition of exchange with respect to crypto.”

In addition, Uyeda asked SEC staff to work with the Treasury Department, the Federal Reserve and market participants to consider whether the SEC should move ahead with those regulatory changes, according to the remarks.

After the commission under former SEC Chairman Jay Clayton issued a proposed rule in 2020, the commission under SEC Chairman Gary Gensler rewrote that proposal in 2022 to redefine the regulatory definition of an “exchange” in a way that would expand the list of affected entities, Uyeda said.

“The new definition of the term ‘exchange’ included ‘communication protocols’ without clearly defining what that term meant,” Uyeda said in his remarks. “Effectively, the vastly expanded definition of an ‘exchange’ would have picked up various protocols used with respect to crypto assets. 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’s remarks came days after the White House hosted the nation’s first ever “Crypto Summit,” which brought together President Donald Trump, Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, “AI and Crypto Czar” David Sacks and more than two dozen crypto executives and federal agency representatives.

The summit aimed to share feedback on how the U.S. can become a leader in the digital asset space, PYMNTS reported Friday (March 7).

In January, the SEC launched a crypto task force focused on developing a “comprehensive and clear” regulatory framework for crypto assets. The task force will collaborate with SEC staff and the public, the commission said at the time in a press release.