In a significant development for the crypto market in the United States, acting Securities and Exchange Commission (SEC) Chair Mark Uyeda has announced plans to revise a controversial proposal that would require digital asset exchanges to register under alternative trading system (ATS) rules. The proposal, initially introduced in 2022, aimed to broaden the definition of an “exchange” to address a perceived regulatory gap in the oversight of various trading platforms. However, the proposal faced significant pushback from industry players, particularly major exchanges like Coinbase, who argued that the regulations would severely restrict their operations.
Speaking at the Institute of International Bankers conference in Washington, Uyeda criticized the SEC’s regulatory approach to crypto exchanges, suggesting that the commission had erred in equating the regulation of Treasury markets with imposing stringent oversight on the rapidly growing crypto market. He emphasized the need to refocus the proposal on its original intent, which was to include proprietary trading firms that actively trade US Treasuries, ensuring they are subject to the same regulatory standards as banks and other financial institutions.
Uyeda highlighted a key concern regarding alternative trading systems, noting that while they play a crucial role in facilitating trades for securities, including US Treasuries, they are not currently held to the same transparency and investor protection standards as other trading platforms. This lack of oversight raises concerns about market integrity and investor safeguards, particularly in the context of complex financial instruments.
As the SEC considers how to recalibrate the proposed rule, market participants are left in suspense regarding the timeline for any potential re-proposal or final rule vote. Major regulatory changes typically unfold over several months, and the process may be further delayed until pro-crypto nominee Paul Atkins, nominated by President Donald Trump to lead the SEC, is confirmed by the Senate.
The timing of these discussions comes at a challenging period for the crypto market, with prices experiencing significant fluctuations. Bitcoin recently fell below $79,000, continuing a downward trend that saw it decline nearly 3% in a single day. Other crypto assets, including Ethereum (ETH), XRP, Solana (SOL), and Cardano (ADA), have also reported declines in value, with some experiencing drops of up to 31% over the past five days.
These fluctuations in crypto values are closely tied to broader economic concerns, including fears of a looming recession fueled by President Trump’s aggressive tariff policies targeting Canada, Mexico, and China. Business groups have raised alarms that these import taxes will adversely affect various industries and consumers, exacerbating economic uncertainty.
Overall, Uyeda’s announcement to revise the controversial proposal on crypto trading venues signals a potential shift in the SEC’s approach to regulating the crypto market in the United States. Market participants will be closely watching for updates on the proposed rule and its implications for the industry.