The US Securities and Exchange Commission (SEC) is currently reevaluating a proposal that would require certain crypto firms to register as alternative trading systems. Acting chairman Mark Uyeda announced this potential change during the 2025 Annual Washington Conference of the Institute of International Bankers. He expressed his concerns about linking the regulation of Treasury markets with increased oversight of the crypto sector and instructed SEC staff to explore ways to abandon this provision.
The initial proposal, introduced in 2022, aimed to expand oversight of the crypto industry by classifying some firms under the same regulatory framework as traditional trading platforms. This move was met with opposition from the crypto industry. Uyeda acknowledged that merging the regulation of government securities trading with increased oversight of crypto firms was a misstep.
Notably, the proposal would have considered not only centralized exchanges but also decentralized finance (DeFi) protocols as alternative trading systems. Bill Hughes, a lawyer at Consensys, expressed relief at Uyeda’s consideration of abandoning this provision.
The new stance of the SEC under the current administration emphasizes cooperation with other government agencies and soliciting public feedback. Commissioner Hester Peirce confirmed collaboration with the Commodity Futures Trading Commission (CFTC) on crypto matters. Peirce highlighted the importance of feedback from the crypto industry in shaping regulations, emphasizing the need for those affected by the rules to have a say in their creation.
To engage with stakeholders in the crypto industry, the SEC’s Crypto Task Force, led by Peirce, will be conducting public roundtables to gather feedback on various aspects of the sector. Additionally, the Task Force has been meeting with crypto firms to discuss topics such as allowing staking on exchange-traded products (ETP).
The decision to reconsider the proposal regarding registration as alternative trading systems reflects a shift in the SEC’s approach towards regulating the crypto industry. By actively seeking input from industry stakeholders and fostering collaboration with other regulatory bodies, the SEC aims to strike a balance between oversight and innovation in the rapidly evolving crypto space.