Acting SEC Chair Mark Uyeda Pushes to Eliminate Rule Targeting DeFi Exchanges

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Acting SEC Chair Mark Uyeda has announced his decision to reconsider a proposed rule that would have regulated decentralized finance (DeFi) exchanges. The rule, called Regulation ATS, aimed to redefine an exchange to include communication protocols used within the crypto industry. Uyeda revealed that he had instructed SEC staff to explore the possibility of removing the section of the proposal pertaining to crypto, following significant public backlash.

SEC Chair Mark Uyeda Moves to Reconsider DeFi Exchange Rule

In a recent shift within crypto regulation, SEC Chair Mark Uyeda directed the agency’s staff to review the proposed changes to Regulation ATS, which sought to extend the definition of an exchange to include crypto communication protocols. This expansion would have required decentralized finance (DeFi) platforms to register as regulated exchanges.

The proposal met with widespread criticism from the crypto industry, which expressed concerns that such a move would create excessive compliance burdens for DeFi platforms. Acknowledging these concerns, Uyeda emphasized that the SEC must reconsider its approach, signaling a potential retreat from the proposed rule.

In other news on crypto regulations, Thailand’s SEC has officially approved USDT as a recognized cryptocurrency, allowing virtual asset service providers in the country to offer Tether’s stablecoin on their platforms. This decision is expected to increase access to USDT for businesses and individuals alike.

Regulation ATS Could Have Classified DeFi Platforms as Exchanges

Originally designed to regulate alternative trading systems, Regulation ATS was amended under former SEC Chair Gary Gensler. The proposed revisions could have broadened its scope to include DeFi platforms, effectively subjecting decentralized exchanges to regulatory oversight comparable to that of traditional financial markets.

Many critics, however, raised alarms that the rule would stifle innovation in the DeFi space. Industry leaders argued that forcing decentralized projects to comply with traditional exchange registration and disclosure requirements would be impractical given their decentralized nature. Uyeda has acknowledged these concerns and hinted that the SEC may reevaluate its stance on the matter.

Recently, ConsenSys, a major blockchain company, publicly challenged the SEC’s proposed changes to DeFi regulations. The company argued that the new rules overstep the agency’s legal jurisdiction and impose undue regulatory burdens on decentralized protocols, conflicting with existing legal frameworks. ConsenSys has urged the SEC to withdraw the rule entirely, warning that it could harm innovation and create unnecessary compliance complexities.

Shift in Regulatory Approach: Trump-Era Influence on Crypto Regulations

The SEC’s recent actions, including Uyeda’s decision, reflect a broader shift in the agency’s approach to crypto regulations under the current administration. Since the departure of former SEC Chair Gary Gensler, the SEC has rolled back some of its stricter policies, including rescinding crypto accounting guidelines and halting several enforcement actions against industry players.

This change signals a more relaxed regulatory environment for digital assets. Under the Trump administration, the SEC appears to be focusing on easing regulations that were criticized as overly aggressive, with Uyeda’s recent actions continuing this trend of reassessing the agency’s approach to crypto oversight.

In addition, the SEC’s ongoing collaboration with the Commodity Futures Trading Commission (CFTC) is expected to help eliminate jurisdictional conflicts and establish a clearer, more structured regulatory framework for the crypto industry. This could provide much-needed clarity for crypto market participants, paving the way for a more predictable regulatory environment.