March 11 Crypto News – SEC’s Shift in Crypto Regulation: Could DeFi Survive the New Proposed Rule?

March 11 Crypto News – Uyeda’s Review of SEC’s Crypto Exchange Rule: What It Means for DeFi Projects

March 11 Crypto News – On Monday, Acting U.S. Securities and Exchange Commission (SEC) Chair Mark Uyeda announced that he directed SEC staff to review a proposed rule change aimed at expanding the definition of an “exchange” to potentially include decentralized crypto projects. The proposed rule, known as Regulation ATS, has been in development for years but was revisited in April 2024. Uyeda’s comments marked the latest shift in the SEC’s stance following the Trump administration’s arrival, signaling a more cautious approach toward crypto regulation.

Controversial Proposal Could Affect DeFi Projects

The key change under review would include communication protocols in the definition of an exchange, potentially affecting decentralized finance (DeFi) projects. The rule would require these projects to submit regular filings with the SEC and be subject to mandatory disclosures, causing concern within the crypto industry. Critics argue that this expansion could harm decentralized exchanges, with some warning that it might “destroy” them entirely.

Uyeda Criticizes Previous SEC Approach

Uyeda criticized the SEC’s previous handling of crypto regulation, particularly under former SEC Chair Gary Gensler, who had proposed a broad approach linking the regulation of Treasury markets to crypto markets. Uyeda called this a “mistake” and emphasized that crypto assets should not be subject to overly aggressive regulation. He also highlighted the negative public feedback on the proposed definition and announced that he had asked SEC staff to explore abandoning this part of the proposal.

Changing Stance Under the Trump Administration

The SEC’s stance on crypto has undergone significant changes since the Biden administration. Under Gensler’s leadership, the SEC classified most cryptocurrencies, aside from Bitcoin, as securities. However, with the shift to the Trump administration, the SEC has quickly reversed several of these policies, including rescinding controversial crypto accounting guidance and halting enforcement actions against major crypto industry players.

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