Blockchain Association Urges the SEC to Stop Applying Equity Market Structures to the Crypto Industry

The Blockchain Association has urged the U.S. Securities and Exchange Commission (SEC) to stop applying equity market structures to the crypto industry.

The Blockchain Association has urged the U.S. Securities and Exchange Commission (SEC) to stop applying equity market structures to the crypto industry.

In a formal response to SEC Commissioner Hester Peirce’s request for input on crypto trading practices, the association argued that current approaches are not suitable for the unique features of blockchain technology. The association’s letter, submitted on May 2, 2025, focuses primarily on topics related to trading, clearing, settlement, and custody in the digital asset space. The group represents a range of crypto firms, including Coinbase (NASDAQ:COIN), Ripple and Uniswap Labs.

According to a recent thread on X, the Blockchain Association is calling on the SEC to adopt a more flexible and evolving regulatory approach for crypto assets. The existing structure was designed for the traditional equity markets, it says, and it doesn’t factor the decentralized and real time nature of blockchain based systems.

“The Association urged the Commission to refrain from adopting rules, policies, or guidance that would limit who can use blockchain technology or what the technology can be used for.”

The association, whose members include Circle, Coinbase, FTX.US, Huobi, and Uniswap Labs, is advising the SEC to consider the role of blockchain technology in an overarching economic and technological context. They also said that blockchain facilitates innovations like real time settlement, disintermediation and lower transaction costs.

Their letter suggests modernizing best execution standards by placing emphasis on the duty of reasonable diligence and increases in transparency. They instead advocate enhanced disclosure instead of imposing strict rules ordering protection as is the case in equities.

The Blockchain Association also highlighted the importance of blockchain's open and verifiable data structure for enabling real-time monitoring by regulators. They suggest utilizing exchange APIs and publicly available data rather than collecting sensitive personal information from individuals.

However, the association acknowledged a "privacy risk" in their submission, referencing a June 2024 article by policy executive Marisa Tashman Coppel. They noted that collecting excessive personal data could backfire, potentially increasing its misuse against users.

"The Commission should not assume that it needs to collect large amounts of personal data to achieve its regulatory objectives," part of the letter read.

In addition, the Blockchain Association further explained that blockchain's transparency permits regulators to track activity in real-time without intruding on user privacy. The association believes this offers a better path for regulatory compliance compared to traditional recordkeeping methods.

In their submission, the Blockchain Association criticized past SEC leadership for attempting to fit crypto markets into equity-based models. Under former SEC Chair Gary Gensler, the agency often treated most digital assets as securities and pursued strong enforcement actions against several major firms.

The association claims this approach failed to account for blockchain’s distinct features.

“The previous administration tried to mold crypto market structure along the lines of a stylized view of the equity markets, which does not take into account the unique characteristics of blockchain technology or the new paradigms in finance that it is driving.”

The group now supports the direction of the current administration. Chair Paul Atkins, who replaced Gensler, has expressed support for working with lawmakers to build a crypto-friendly framework. Since taking over, Atkins and former acting Chair Mark Uyeda have launched a new crypto task force and hosted public roundtables to gather feedback.

As the SEC is seen to be readjusting its strategy, other major crypto-related events have unfolded. This week, the agency closed its investigation into PayPal’s PYUSD stablecoin without any further enforcement action. The agency described its discussions with PayPal as productive.

In parallel, Ripple co-founder Chris Larsen is set to meet with SEC Chair Atkins. Although the agenda for their meeting wasn’t disclosed, analysts believe they may discuss the ongoing XRP lawsuit. Meanwhile, the SEC and Binance have jointly requested more time in their legal case, asking for a 60-day pause to pursue settlement talks.

Across the Atlantic, the UK’s Financial Conduct Authority is also collecting feedback from the public and the industry. The UK regulator is looking at how to best define and manage crypto-related services in national law. The aim is to bring more clarity to the fast-moving digital asset space.