SEC’s Uyeda Plans to Strike Crypto From Trading System Proposal

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(Bloomberg) — A Securities and Exchange Commission proposal requiring digital asset exchanges to register under alternative trading system rules is in for an overhaul.

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Acting SEC Chair Mark Uyeda said Monday that he has asked staff to pare back parts of the rule, which was proposed in 2022 and would have broadened the definition of an “exchange.”

At the time, regulators said the measure would close a regulatory gap created by certain platforms. The move garnered major industry opposition from the likes of Coinbase Global Inc., who said it would dramatically curtail their operations.

“In my view, it was a mistake for the Commission to link together regulation of the Treasury markets with a heavy-handed attempt to tamp down the crypto market,” Uyeda said in his planned remarks at an Institute of International Bankers conference in Washington.

The regulator is now considering whether and how to bring the proposed rule back to its original intent, initially put forward during the first Trump administration, to encompass proprietary trading firms that actively trade US Treasuries.

Proprietary trading firms should be subject to the same regulatory treatment as banks and other firms that conduct much of the transactions in the US bond market, Uyeda said.

“Despite being dependent on sophisticated technology, ATSs that trade US government securities are not subject to the transparency, fair and orderly markets, investor protections, and system integrity rules that apply to ATSs generally,” Uyeda said.

An alternative trading system is a trading platform for buyers and sellers of securities, including US Treasuries, that aren’t required to register as exchanges with the SEC. That’s conditional on them complying with the requirements of Regulation ATS, which includes registering with the commission as a broker-dealer.

Uyeda didn’t provide a time frame for when or whether the agency might re-propose the rule or move to vote on a revamped final rule. Major rulemakings tend to take many months, so it’s possible any future move could come after Paul Atkins, President Donald Trump’s choice to lead the SEC, is confirmed by the Senate.

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