SEC’s Shift in Stance: Crypto Firms May Escape Exchange Registration Requirements, Highlights Impact on Bitcoin Market

In a pivotal development for the cryptocurrency sector, SEC Acting Chair Mark Uyeda announced on March 11 that the agency is considering withdrawing a contentious proposal that mandates crypto firms to register as exchanges. Uyeda pointed out the extensive public backlash against expanding the definition of ‘exchange’ to include digital assets, emphasizing that linking U.S. Treasury market regulation with limitations on the crypto market is misguided. Initially proposed by former SEC Chair Clayton in 2020 to focus on U.S. Treasury market participants, this rule faced significant backlash as current Chair Gensler broadened its scope to encompass the crypto sector, stirring considerable debate. Following Gensler’s departure, the SEC has noticeably softened its stance on crypto regulation, dismissing lawsuits against various digital asset firms and appointing a dedicated task force, spearheaded by crypto advocate Commissioner Peirce, to construct a robust regulatory framework for digital assets.