SEC Acting Chair Seeks to Roll Back Crypto Trading Platform Proposal

Mark Uyeda, the Acting Chairman of the U.S. Securities and Exchange Commission (SEC), has signaled plans to reverse a widely criticized rule that sought to broaden the agency's oversight to include cryptocurrency trading platforms. The rule, initially proposed under former chairman Gary Gensler, aimed to expand the SEC’s jurisdiction to include digital asset businesses by redefining what constitutes a trading exchange.

The controversial proposal, crafted over several years, aimed at requiring digital asset platforms and decentralized finance (DeFi) systems to register as regulated exchanges. The rule intended to expand the SEC’s jurisdiction by redefining the term "exchange," potentially capturing a variety of crypto-related services and technologies within its regulatory scope.

However, significant backlash from the crypto industry and the public, citing concerns of regulatory overreach and uncertainty, prompted Uyeda to reconsider the initiative. Critics argued the SEC was overstepping boundaries by conflating crypto regulations with unrelated aspects of financial markets, specifically those involving the U.S. Treasury market.

"In my view, it was a mistake for the commission to link crypto regulation with broader Treasury market oversight," Uyeda said. During recent remarks, he added, "Given the negative public feedback regarding the exchange definition concerning digital assets, I’ve asked the SEC staff to explore options for abandoning this part of the proposal."

The contested rule was developed under former SEC Chair Gary Gensler, whose aggressive stance on crypto regulation has drawn criticism from industry stakeholders. Uyeda’s decision to reconsider parts of this regulation marks a notable shift, suggesting a more moderate and measured regulatory stance toward cryptocurrency markets under the SEC’s current leadership.

As the SEC staff prepares recommendations for possible revisions or withdrawal of the crypto-focused aspects of the rule, stakeholders and industry analysts are closely monitoring developments. Any adjustments or reversals could ease regulatory pressures on digital asset businesses and clarify compliance expectations, potentially fostering a more cooperative relationship between regulators and the crypto industry.