Acting US Securities and Exchange Commission (SEC) Chairman Mark T Uyeda has rejected the enforcement-first approach to cryptocurrency regulation.
“This approach of using notice-and-comment rulemaking or explaining the Commission’s thought process through releases—rather than through enforcement actions—should have been considered for classifying crypto assets under the federal securities laws,” said Uyeda on 21 March 2025 during the crypto roundtable.
Uyeda pointed out that it has been seventeen years since Satoshi Nakamoto made the Bitcoin whitepaper. However, market participants, lawyers, academics, policymakers, and regulators are still grappling with critical questions related to the status of these novel crypto assets under federal securities laws.
“This disagreement is most pronounced when it comes to the application of the investment contract test established by the Supreme Court in its 1946 opinion in SEC v. W.J. Howey Co. (known as the “Howey test”) to crypto assets,” said Uyeda.
He pointed out the lack of uniformity in Howey test application.
💡Key Takeaways from the SEC’s First Crypto Roundtable:
🔹 Regulatory Clarity in Focus – SEC aims to refine digital asset oversight.🔹 Hester Peirce Pushes for Flexibility – Calls for a workable crypto framework.🔹 Mark Uyeda on Policy Gaps – Says SEC should have clarified… pic.twitter.com/LmbJzQCeKM
— CryptoPotato Official (@Crypto_Potato) March 22, 2025
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Hester Peirce Led Crypto Roundtable
“When judicial opinions have created uncertainty for market participants in the past, the Commission and its staff have stepped in to provide guidance,” Uyeda pointed out.
Uyeda’s comments mark a significant shift from the SEC’s previous stance under Gary Gensler.
Furthermore, the roundtable, organized by the Crypto Task Force, addressed long-standing regulatory gaps.
SEC Commissioner Hester Peirce, leading the roundtable, pushed a flexible framework, while the Spring Sprint Toward Crypto Clarity series focused on distinguishing securities from non-securities.
“Spring signifies new beginnings and we have a new beginning here, a restart of the commission’s approach to crypto regulation,” said Peirce.
Explore: SEC Crypto Roundtable Unveiled: The Game Changing Rules You Need to Know
Uyeda Hints At SEC Scrapping Biden-Era Crypto Asset Custody Proposal
The SEC is considering abandoning a controversial proposal from the Biden administration that would have significantly impacted how financial firms safeguard crypto assets for their clients.
In February 2023, Gensler proposed expanding the existing custody rules to explicitly include crypto assets. This proposal would have required qualified custodians—typically banks, broker-dealers, and certain trust companies—to maintain crypto assets on behalf of investment advisers.
Uyeda, speaking at a securities conference in Florida, indicated that the commission is now considering scrapping the proposal entirely. According to a Reuters report dated 17 March 2025, Uyeda said the SEC “needs to prioritize effective and cost-efficient regulations that respect the limits of our statutory authority,”
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Trump’s Choice Of SEC Chair Nominee, Paul Atkins, To Face Panel On 27 March 2025
On 27 March 2025, SEC Chair nominee Paul Atkins and Trump’s top choice for the position, will be facing the Senate Banking Committee to testify. Atkins, who is also a former commission of the SEC, will advance if the votes in the Senate are in his favour.
Notably, Atkins served as an SEC commissioner from 2002 to 2008. His background aligns closely with the cryptocurrency industry.
If confirmed, Atkins’ appointment could represent a seismic shift in the SEC’s regulatory stance toward cryptocurrency.
Key Takeaways
Mark T Uyeda has rejected the enforcement-first approach to cryptocurrency regulation.
He said, “This approach of using notice-and-comment rulemaking or explaining the Commission’s thought process through releases—rather than through enforcement actions—should have been considered for classifying crypto assets under the federal securities laws.”
On 27 March 2025, SEC Chair nominee Paul Atkins and Trump’s top choice for the position, will be facing the Senate Banking Committee to testify.
