SEC to Revive Clayton-Era Proposal to Regulate Venues Trading U.S. Treasuries

In a speech on March 10, 2025, Acting SEC Chairman Mark Uyeda announced that he had directed the SEC staff to explore reviving the 2020 proposal to apply Regulations ATS and SCI to alternative trading systems (ATSs) that facilitate trading in government securities (2020 Proposal).¹ Acting Chairman Uyeda also indicated that although the timelines for implementing mandatory central clearing of most trades in U.S. Treasuries (adopted in December 2023) have been extended, the fundamentals of the mandate are sound and are here to stay. 

Background

In 2020, the SEC, under then-Chair Jay Clayton, issued a proposed rule that, if adopted, would have made government securities ATSs — that is, venues meeting the SEC’s definition of an “exchange”² that support trading exclusively in government securities — subject to Regulation ATS, removing the existing exclusion for such venues. The reforms under the 2020 Proposal would have

• made the operator of a government securities ATS subject to broker-dealer registration requirements

• required a government securities ATS to disclose publicly on Form ATS-G basic information about the government securities ATS and its broker-dealer operator, the other activities of the broker-dealer operator and its affiliates, and the manner of operations of the government securities ATS

• subjected a government securities ATS that meets certain trading volume thresholds to Regulation SCI and the fair access requirements under Regulation ATS Rule 301(b)(5)³

In 2022, rather than adopt the 2020 Proposal, the SEC, under then-Chair Gary Gensler, reproposed it with a significant expansion of its scope to capture additional “communications protocols,” including those supporting digital assets trading (2022 Proposal).⁴ After commenters on the 2022 Proposal sought clarity on this potential expansion, the SEC issued a lengthy interpretation that made explicit the Gensler Commission’s view that most crypto trading and decentralized finance (DeFi) platforms would meet the amended definition of an “exchange” under the 2022 Proposal (DeFi Release).⁵

Acting Chairman Uyeda’s 2025 Directive

Now, Acting Chairman Uyeda has directed the SEC staff to revive the 2020 Proposal and present options to the Commission for abandoning the crypto-related components from the 2022 Proposal and DeFi Release.⁶ This announcement signals that the regulation of digital or cryptoassets may proceed separately from regulatory initiatives for traditional asset classes such as fixed income securities.

Acting Chairman Uyeda also expressed continued support for the SEC’s recent adoption of rules to require central clearing for a majority of cash and repo transactions in Treasuries. While supporting the extended compliance deadlines the SEC recently set, he also noted a belief that the fundamentals of the rulemaking are sound.⁷ On February 25, 2025, the SEC extended the related compliance deadlines by one year.⁸ The new compliance deadlines for covered transactions are December 31, 2026, for purchases and sales and June 30, 2027, for repo market transactions.

¹Acting Chairman Mark T. Uyeda, Remarks to the 2025 Annual Washington Conference of the Institute of International Bankers (Mar. 10, 2025), https://www.sec.gov/newsroom/speeches-statements/uyeda-remarks-institute-international-bankers-031025 [hereinafter Acting Chairman Uyeda Remarks]. See also 15 U.S.C. 78c(a)(42) (defining the term “government securities”).

²17 CFR 240.3b-16 (interpreting the definition of an “exchange” under Section 3(a)(1) of the Exchange Act).

³For more information on the 2020 Proposal, please see Sidley’s previous update here.

⁴For more information on the 2022 Proposal, please see Sidley’s previous update here.

⁵For more information on the DeFi Release, please see Sidley’s previous update here.

⁶Specifically, the Acting Chairman directed the SEC staff “to re-engage with the Treasury Department, the Federal Reserve, and market participants to consider whether the Commission should move forward on regulatory changes for Government Securities ATSs” and, “in light of the significant negative public comment received on the definition of exchange with respect to crypto,” to present “options on abandoning that part of the proposal.” Acting Chairman Uyeda Remarks.

⁷For more information on the SEC’s rules regarding central clearing of transactions in Treasuries, please see Sidley’s previous update here.

⁸Securities Exchange Act Release No. 102486 (February 25, 2025), 90 FR 11079 (March 3, 2025).