Nikolas Sargeant
The U.S. Securities and Exchange Commission is reconsidering its approach to regulating cryptocurrency companies, indicating a potential retreat from earlier plans to impose stricter registration requirements on the industry.
Acting Chairman Mark Uyeda announced on Monday that he has directed SEC staff to explore options for abandoning a proposed rule that would have expanded the definition of alternative trading systems (ATS) to include certain cryptocurrency platforms.
The SEC introduced this proposal in 2022 as part of a broader strategy to expand its oversight of cryptocurrency markets. The plan would have required some crypto trading platforms to register as alternative trading systems, effectively bringing them under regulatory frameworks similar to those governing traditional financial markets.
Alternative trading systems facilitate securities trading outside of conventional stock exchanges, operating under a different regulatory structure. However, the proposed expansion faced significant opposition from industry leaders, who argued it would stifle innovation and impose unnecessary regulatory burdens on emerging technologies.
Uyeda Acknowledges Regulatory Overreach in Crypto Markets
Speaking to a group of bankers, Uyeda acknowledged that the proposal was initially designed to regulate Treasury markets but had been expanded to include cryptocurrency in a way he now views as excessive and potentially harmful.
"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 stated.
To address these concerns, he issued two specific directives to SEC staff. First, he requested they re-engage with the Treasury Department, the Federal Reserve, and key market participants to reassess whether regulatory changes for Government Securities ATSs should proceed independently.
Second, and more significantly for the crypto industry, he instructed staff to explore pathways to abandon the controversial expansion of the ATS definition for cryptocurrency firms.
SEC Shifts Away From Aggressive Enforcement Approach
The original rule proposal emerged during former SEC Chairman Gary Gensler's tenure, which was characterized by aggressive enforcement actions against cryptocurrency companies and platforms.
However, the new administration has adopted a markedly different stance, pushing for more industry-friendly policies. Reflecting this shift in regulatory philosophy, Uyeda recently established a dedicated cryptocurrency task force on January 21, charged with developing a clearer legal framework for digital assets, establishing practical registration pathways, and creating reasonable disclosure requirements.
The SEC's newly formed Crypto Task Force is scheduled to hold its inaugural meeting later this month, marking a significant step toward reshaping the regulatory landscape for digital assets in a way that balances consumer protection with innovation.
