US regulators are reassessing their position on decentralized finance DeFi after acting SEC chairman Mark Uyeda signaled he plans to withdraw a controversial proposal.

The rule, originally intended to broaden the definition of exchanges to include DeFi protocols, came under sharp criticism from industry stakeholders who warned that it could stifle innovation and impose impractical compliance requirements. Gensler acknowledged these concerns and directed SEC staff to explore the possibility of withdrawing the cryptocurrency-related portion of the proposal.
The proposed changes stem from amendments to the ATS Regulation, which was initially introduced to regulate alternative trading systems. Under the previous SEC administration, the rule was reconsidered to classify potentially DeFi platforms as regulated exchanges.
Critics argued that this approach ignores the decentralized nature of these networks and may create significant legal and operational barriers. Ueda's recent statement implies a shift in regulatory priorities as the agency reconsiders its approach to supervising digital assets.
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The decision follows broader regulatory changes in the United States, where the Securities and Exchange Commission recently reversed some crypto-related policies. This includes rescinding strict accounting guidelines and ceasing enforcement actions against sector participants.
The agency's evolving position signals a transition to a softer regulatory environment for digital assets. Meanwhile, collaboration between the SEC and the Commodity Futures Trading Commission (CFTC) is expected to provide greater clarity on how cryptocurrencies will be regulated in the future.