US SEC May Exclude Crypto Firms From Alternative Trading Systems – Here’s Why

In light of the United States government’s recent pivot to crypto-friendliness, local agencies are beginning to amend their regulatory approach to the crypto industry. One major policy shift likely to be seen in the coming months is the Securities and Exchange Commission’s (SEC) classification of crypto trading platforms.

During the ongoing 2025 Annual Washington Conference of the Institute of International Bankers, Mark Uyeda, acting chairman of the US SEC, revealed that he has begun to make moves to amend a proposal to classify crypto trading platforms as alternative trading systems (ATSs).

According to Uyeda, the SEC made a mistake by linking the regulation of Treasury markets with a “heavy-handed attempt to tamp down the crypto market.”

Regulating US Treasuries

Uyeda defined ATSs as trading venues that connect buyers and sellers of securities outside of traditional stock exchanges. If they comply with Regulation ATS, they are not required to register as exchanges. Regulation ATS refers to a set of rules that oversee the operations of ATSs and allow them to operate legally.

The SEC adopted Regulation ATS in 1998 and agreed to exclude ATSs from registering as exchanges or complying with Regulation ATS provided they limited their activities to government securities and registered as broker-dealers. The agency had observed that government securities broker-dealers were regulated by the Treasury and federal banking regulators; hence, it saw no need to oversee certain ATSs.

However, US Treasuries markets evolved over time and the SEC eventually saw the need to regulate ATSs that traded Treasuries and government securities.

Under the leadership of former SEC Chairman Jay Clayton, the Commission observed that ATSs trading government securities were not subject to a system that enforced transparency, investor protections, and fair and orderly markets. By 2020, the SEC proposed to treat ATS users fairly and remove the exemption that excluded ATSs from exchange registration, among other things.

Gensler’s Approach

Since Clayton was close to the end of his tenure, it fell to the just-resigned SEC Chair Gary Gensler to handle the amendments to ATS regulations. However, the SEC took a different direction and sought to expand the proposal to include entities beyond ATSs trading government securities.

Uyeda said the new definition of “exchange” included “communications protocols,” extending to several protocols used in the crypto industry. Still, market participants have yet to benefit from the amendments Clayton called for in that proposal.

The acting SEC chairman says he has asked the SEC staff to re-engage with other regulators to know if the Commission will move forward with ATS regulatory changes. He has also asked the team for options on abandoning that part of the proposal that affected crypto firms.