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11/03/25
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SEC Signals Shift in Crypto Regulation: Possible Abandonment of Controversial Exchange Rule
A shift in regulatory direction at the U.S. Securities and Exchange Commission (SEC) may be on the horizon, as the acting chairman has hinted at potentially abandoning a proposed rule that would require specific cryptocurrency firms to register as exchanges. The initiative was initially conceived as a way to broaden regulatory oversight of alternative trading systems (ATSs) but faced backlash for its implications on the crypto industry.
During a recent conference, the acting SEC chairman expressed concern over the negative public feedback regarding the proposed definition of exchange in relation to crypto assets. He indicated that he had requested options to discard parts of the proposal, emphasizing that linking the regulation of Treasury markets with tighter crypto regulations was a misstep. This proposed regulatory chain began under former SEC Chairman Jay Clayton, when the focus was primarily on creating clear rules for participants in U.S. Treasury markets.
However, the regulatory landscape changed under Gary Gensler, the former SEC chair, who expanded the scope of regulation beyond Treasury securities to include a broader range of cryptocurrency operations. This shift resulted in a 2022 proposal that redefined what constitutes an exchange, incorporating communication protocols without precise definitions. This broad interpretation raised concerns about its impact on various protocols utilized in the crypto space.
Following Gensler’s resignation, the SEC has adopted a more lenient stance toward cryptocurrencies. Several high-profile cases against crypto firms have been dismissed, signaling a shift in regulatory priorities. Recent actions include the dismissal of cases against crypto exchange Gemini and trading firm Cumberland DRW, alongside the establishment of a crypto task force aimed at creating a supportive framework for digital assets under the guidance of a commissioner with a favorable view of the crypto industry.
This evolving regulatory landscape leaves many questions unanswered about the future of cryptocurrency regulation in the United States.
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