SEC Drops Rule Targeting Crypto Exchanges, Shifts Approach

The SEC is stepping back from a proposal that could have expanded its control over crypto exchange platforms. 

Acting Chair Mark Uyeda is pushing to withdraw the rule, which was introduced under former Chair Gary Gensler. The rule would require more trading venues, including those dealing with digital assets, to register with the agency.

SEC Will Not Regulate Crypto Exchanges

The proposal sought to redefine what qualifies as an exchange by including certain “communications protocols.” This broad approach would have affected multiple digital asset businesses. 

Uyeda argues that the definition was unclear and risked regulating protocols that were never intended to fall under the SEC’s oversight. 

The rule has been under consideration for years, and Gary Gensler was potentially in favor of implementing it. 

Needless to say, had it been implemented, it would’ve been significantly damaging for major exchanges. However, Uyeda has now instructed the agency’s staff to stop pursuing it.

This reversal reflects a broader shift in the SEC’s stance on crypto under the new leadership appointed by President Donald Trump. Several regulatory actions taken during Gensler’s tenure are now being revisited or rolled back.

At the same time, the SEC has dropped multiple enforcement cases against crypto firms. Over the past week, at least six cases have been dismissed, including actions against Kraken, Coinbase, Robinhood, and MetaMask. 

This marks a significant change in the SEC’s approach to crypto regulation.

Meanwhile, the agency’s Crypto Task Force, led by Commissioner Hester Peirce, is focusing on industry engagement. The task force includes experts like Richard Gabbert, Michael Selig, Taylor Asher, and Sumeera Younis. 

They will host “Spring Sprint Toward Crypto Clarity” roundtables, starting on March 21, to discuss compliance challenges and digital asset policies.

With the SEC shifting its regulatory focus, the crypto industry is watching closely to see how these changes will impact businesses operating in the space.