Crypto Exchanges Get a Break: SEC's New Rule Change and What It Means

The SEC recently made a move that might not directly involve Bitcoin or Ethereum but could significantly impact how crypto exchanges handle legal battles in the coming years. On October 31, the SEC issued an order that pushed back compliance deadlines for Regulation NMS, which governs US equity trading, to 2026. This decision came after a court rejected a request to pause the deadlines, citing a government funding gap and the need to keep markets running smoothly. This order is a big deal because it sets a precedent for crypto exchanges like Coinbase, Kraken, and Binance. These platforms have been fighting enforcement actions while waiting for clear rules on how to operate in the crypto market. The SEC's decision to give traditional exchanges extra time to comply with new rules, especially during a government shutdown, strengthens the argument that crypto exchanges deserve the same consideration. After all, how can you follow rules that haven't been clearly defined yet? Kraken, Bittrex, and Binance have all argued in court that the SEC hasn't provided clear guidance on how to comply with securities laws in the crypto world. They claim that suing them for not following rules that aren't clearly explained violates their rights to due process. Judges have started to side with this argument, noting that the SEC can't expect platforms to follow rules that haven't been properly laid out. The SEC's recent order on Regulation NMS shows that even in traditional markets, compliance can be tricky when rules are still being figured out. This order could give crypto exchanges a stronger case in court, as they argue that they can't be held accountable for not following rules that don't exist yet. The order doesn't mention crypto, but it sets a clear precedent: when rules are unclear and resources are limited, giving platforms more time to comply makes sense. The relief provided by the SEC extends until 2026 for certain rules. In the meantime, crypto cases will continue to focus on fair notice and due process. However, the SEC's own acknowledgment that delayed compliance helps maintain orderly markets could strengthen the arguments of crypto defendants. If the SEC eventually finalizes rules for the crypto market, similar exemptive orders might be issued to give platforms time to adjust. For now, crypto lawyers have a new strategy to use in court, one that mirrors the approach the SEC took for traditional exchanges.