SEC Reconsiders Expanded Exchange Definition

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Crypto in the Crosshairs? SEC Reconsiders Expanded Exchange Definition

Written by Aaron S.,

Editor-In-Chief

Last Updated: March 11, 2025

Key Takeaways

The SEC is reviewing a rule that could classify crypto platforms as exchanges, potentially requiring stricter oversight;
Uyeda criticized the proposal, arguing it unfairly expanded Treasury market rules to include crypto without clear justification;
The SEC is reconsidering how to refine the rule to prevent unintended consequences for crypto businesses.

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Crypto in the Crosshairs? SEC Reconsiders Expanded Exchange Definition

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The US Securities and Exchange Commission (SEC) is reviewing a proposal that could expand the definition of an exchange to include platforms handling cryptocurrency transactions.

Acting SEC Chair Mark Uyeda said on March 10 that the agency is now looking at ways to adjust the proposal so that certain crypto-related platforms are not unintentionally affected.

The initial rule, introduced in 2020, was meant to clarify regulations for alternative trading systems, mainly focusing on the US Treasury market. However, Uyeda noted that during Gary Gensler’s time as SEC Chair, the proposal was broadened.

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As a result, it would have required various crypto-related protocols to register as exchanges, which subject them to stricter oversight. Uyeda criticized this approach, stating:

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.

The proposal has gone through several rounds of public feedback but has yet to be finalized. The SEC describes it as being in the “final rule stage”.

Uyeda pointed out that the proposal refers to “communication protocols that bring together buyers and sellers of securities” but does not clearly define what those protocols are.

He argued that this lack of clarity had expanded the rule beyond its intended focus on government securities, which could unnecessarily affect crypto businesses.

Meanwhile, Coinbase $2.57B recently filed a Freedom of Information Act (FOIA) request with the SEC. What was it for? Read the full story.