The U.S. Securities and Exchange Commission (SEC) is set to drop a proposal that would have required certain cryptocurrency firms to register as alternative trading systems (ATS).
On Monday, Acting SEC Chairman Mark Uyeda announced that he has directed staff to abandon this part of the 2022 plan, which had yet to be finalized.
The SEC issued the rule in 2022 to govern Treasury markets with the hope of enhancing regulation and transparency. The commission then extended it to cover some cryptocurrency trading platforms so that they would have been subjected to more stringent regulatory demands.
Uyeda stated that the proposal was initially designed for regulation of the Treasury markets but was subsequently broadened to cover crypto companies. According to Uyeda, “In my opinion, it was a mistake by the Commission to tie together regulation of the Treasury markets with a heavy-handed effort to suppress the crypto market.”
The crypto industry also criticized the move, arguing that it would hurt innovation and create unnecessary regulatory hurdles.
Uyeda, in a speech to bankers, stated that it was a mistake to merge Treasury market regulations with an effort to crack down on the crypto sector. He believes these are separate issues and should be handled independently.
He also directed SEC staff to reopen discussions with the Treasury Department, the Federal Reserve, and market participants to focus solely on Treasury market reforms, without involving the crypto industry.
This move comes as part of a larger Crypto policy change during the Republican leadership of the SEC. Earlier, while under Democratic control, the agency had been quite aggressive in pushing for strict rules and filing lawsuits against cryptocurrency companies.
Now, the SEC has launched a crypto task force to review policies and has begun pausing or dismissing pending lawsuits against crypto companies.
