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A proposed rule change pushing for some crypto firms to register as exchanges could be abandoned under a new directive from the acting chairman of the US Securities and Exchange Commission.
During a March 10 speech at the Washington Conference of the Institute of International Bankers, acting SEC Chairman Mark Uyeda said he had “asked SEC staff for options on abandoning” part of the proposed changes that would expand regulation of alternative trading systems (ATSs) to include crypto firms.
“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.
Uyeda says the rule was initially crafted in 2020 under former SEC Chairman Jay Clayton to establish more straightforward rules for alternative trading systems; the guidance was intended to mainly impact US Treasury market participants.
However, when it fell to former SEC Chair Gary Gensler to implement the rule, he took a “very different direction” by expanding the list beyond just 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.
Related: Coinbase finds flawed analysis in SEC's proposed exchange definition
Gensler’s time at the SEC came with an aggressive regulatory stance toward crypto.
He brought upward of 100 regulatory actions against firms from 2021 until his resignation on Jan. 20, the same day as Donald Trump started his second term as US president. Trump had promised to fire Gensler if elected.
After Genlers’ resignation, the SEC has since taken a new friendlier approach toward crypto. A growing number of firms facing legal action from the regulator have had their cases dismissed, including crypto exchange Gemini on Feb. 26, Kraken on March 3 and crypto trading firm Cumberland DRW on March 4.
Meanwhile, the agency has also launched a crypto task force dedicated to developing a framework for digital assets led by crypto-friendly Commissioner Hester Peirce.
Magazine: SEC’s U-turn on crypto leaves key questions unanswered
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