KeyTakeaways:
- SEC Chair Uyeda reviews proposed DeFi regulation after industry pushback on compliance burden.
- Proposed Regulation ATS could have classified DeFi as regulated exchanges, raising concerns.
- SEC’s shift under Uyeda signals more relaxed stance on crypto regulation, easing pressures.
Acting U.S. Securities and Exchange Commission (SEC) Chair Mark Uyeda has began a review of the agency’s proposed rule that would have regulated decentralized finance (DeFi) exchanges. The regulation, known as Regulation ATS, aimed to redefine an exchange to include communication protocols utilized by crypto platforms.
https://twitter.com/AlexanderGrieve/status/1899155511368634791
Uyeda’s decision to reconsider this proposal follows pushback from the crypto industry, which voiced concerns about the potential regulatory burden it would place on DeFi platforms.
The Regulation ATS expansion, initially introduced under former SEC Chair Gary Gensler, sought to extend the definition of an exchange to encompass decentralized platforms within the cryptocurrency sector. This shift would have required DeFi protocols to register as regulated exchanges, a move that raised alarms among industry stakeholders.
Read Also: Gary Gensler Steps Down, Mark Uyeda Appointed as Acting SEC Chair
Many argued that such a requirement would impose cumbersome compliance obligations on decentralized platforms, which operate without centralized control and may not be equipped to meet traditional regulatory standards.
Industry Backlash and Concerns Over Compliance Burdens
The SEC’s proposed rule encountered strong opposition, with many in the DeFi space warning that it could stifle innovation. By treating decentralized exchanges like traditional financial exchanges, the rule could have introduced complex registration and reporting requirements that are difficult to apply to decentralized platforms.
In response to these concerns, Uyeda directed SEC staff to explore the possibility of abandoning the crypto portion of the proposal, signaling a potential shift in the agency’s approach to regulating DeFi exchanges.
The Shift in Regulatory Tone Under Uyeda’s Leadership
Uyeda’s decision is part of a broader shift in the SEC’s stance on cryptocurrency regulation. Since his appointment, the agency has reversed several policies introduced under Gensler, focusing on easing regulatory pressures on the industry.
This includes rescinding certain crypto-related accounting guidelines and suspending enforcement actions against crypto companies. With Uyeda at the helm, the SEC is moving away from the more stringent approach adopted during the Trump-era administration, opting for a regulatory environment that is more accommodating to the evolving crypto sector.
International Developments in Crypto Regulation
While the U.S. SEC reconsiders its stance on DeFi exchanges, other countries are moving forward with their crypto regulatory frameworks. Thailand’s SEC, for example, has recently approved Tether (USDT) as a recognized cryptocurrency, allowing virtual asset service providers to use it on their platforms.
Read Also: Thailand SEC Approves Tether’s USDT as an Official Cryptocurrency
In the U.S., the SEC’s reconsidering its stance on DeFi may lead to clearer and more structured oversight of digital assets as it strengthens collaboration with the Commodity Futures Trading Commission (CFTC).
