WASHINGTON, D.C. — The U.S. Securities and Exchange Commission could consider a short-term crypto oversight framework to allow firms to keep innovating while the agency works out a more permanent answer to digital assets regulation, interim Chairman Mark Uyeda suggested during a Friday event at the agency’s Washington headquarters.

«We should consider whether there may be a more efficient method of regulation under an accommodating federal regulatory framework,» said Uyeda, in a recorded statement played at the agency’s latest crypto industry roundtable. «While the Commission works to develop a long term solution to address these issues, a time-limited, conditional exempt relief framework for registrants and non-registrants could allow for greater innovation with blockchain technology within the United States in the near term.»

The securities regulator is waiting for Congress to deliver a crypto market-structure law that will allow it to start writing the rules that the digital assets sector has been clamoring for. That may happen as soon as later this year, according to the lawmakers working on that effort, but months will pass before its arrival and even longer for the SEC and other relevant federal agencies to write regulations and put them in motion.

During this second in a series of crypto roundtables the agency hosted as it overhauls its digital assets stance, Uyeda was still running the agency, though the incoming chairman, Paul Atkins, is poised to take over. Once he arrives, though, Uyeda and fellow Republican Commissioner Hester Peirce, a crypto advocate, will still be on board.

The Republican commissioners noted crypto platforms’ interest in handling both traditionally SEC-regulated activity and business outside the agency’s scope, all under the same roof.

«What can and should we do in the short term, and what should Congress consider in the longer term to ensure that the regulatory gaps are filled as firms increasingly seek to combine securities and non-securities trading activity?» asked Peirce, who leads the SEC Crypto Task Force.

The SEC’s sole Democratic commissioner, Caroline Crenshaw, argued that some of the market disruptions and company failures in the recent past have forced industry observers to become «painfully aware of the mismatch between investors expectations and reality.»

«Crypto trading platforms are unique because, among other reasons, they often perform multiple services under one roof, sometimes including bridge clearing and custody,» said Crenshaw. In traditional finance, those kinds of functions are «typically performed by separate registered entities,» because they come with a «high risk of conflicts of interest and risks for investors.»

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Traditional U.S. assets are going haywire as U.S.-China trade tensions continue to rattle global markets, now coupled with fresh data of tumbling sentiment towards the U.S. economy and mounting inflation concerns.

The most recent University of Michigan survey, published on Friday, found that consumer sentiment fell to 50.8 from 57.0, nearing the most depressed level in three years and far below that seen during the 2020 Covid shutdowns. Year-ahead inflation expectations surged to 6.7%, up from 5% in the prior month and the highest read since 1981.

On the back of the data, investors resumed selling long-term U.S. government bonds and the greenbacks, two assets traditionally considered as safe havens. The 10-year Treasury yield soared above 4.55% during U.S. morning hours, up more than 50 basis points in just a week. Meanwhile the dollar index (DXY) sank below 100 to a three-year low. Gold, meanwhile, hit a fresh record of $3,240 per ounce.

After a wildly volatile past few sessions, U.S. stocks were trading in a far tighter range on both sides of unchanged on Friday. At press time, the Nasdaq was higher by 0.6%

Meanwhile, cryptocurrency markets were moving higher, with bitcoin (BTC) holding just above $82,000, gaining 4% over the past 24 hours. The broad-market CoinDesk 20 Index was up 3%, with altcoin majors Solana’s SOL, Avalanche’s AVAX leading with 6% gains.

Signal or noise?

While some macroeconomic analysts are fearful that the recent surge in government bond yields is threatening the future outlook of the U.S. economy, others believe investors are reading too much into short-term market swings.

«U.S. dollars and U.S. government debt, two of the market’s most liquid safe haven categories, are going haywire,» Noelle Achison, analyst and author of the Crypto is Macro Now newsletter, said in a Friday note. «This is not the case for other safe havens, however, just those directly tied to the U.S.»

“I believe that it is much more likely that recent sharp moves in these asset classes is due to highly leveraged market participants being forced out of positions than due to fundamentals,” said billionaire investor Bill Ackmann in a post on X.

“Technical factors are driving the dramatic market moves,» Ackman continued. «As a result, markets have become increasingly unreliable as short-term indicators of the impact of policy changes.»

When the U.S. government sanctioned the Ethereum-based crypto mixing service Tornado Cash in 2022, it ignited a debate within the crypto community that continues three years later.

Tornado enabled users to transfer crypto anonymously. The government contended that the service facilitated money laundering, prompting some of Ethereum’s validators and block builders to take steps to avoid engaging with Tornado-linked transactions, which made the service slower and costlier to use.

Advocates argued that complying with the sanctions amounted to censorship — undermining a fundamental cypherpunk principle. President Donald Trump supported the cypherpunks and lifted the sanctions on Tornado Cash in March of this year, but for some Ethereum developers, the situation highlighted a flaw within the network that still exists today: Why should users depend on third-party apps to transact privately on the network?

«Publicly accessible transaction graphs allow anyone to trace the flow of funds between accounts, and balances are visible to all participants in the network, undermining financial privacy,» crypto security researcher Pascal Caversaccio explained in a blog post on Wednesday. «While the Ethereum network’s transparency fosters trustlessness, it also opens the door to potential surveillance, targeting, and exploitation.»

Perhaps emboldened by the recent Tornado Cash developments, Ethereum developers and researchers have once again begun discussing ideas for making the Ethereum network private at its core.

«Privacy must not be an optional feature that users must consciously enable — it must be the default state of the network,» said Caversaccio, whose post outlined his vision for a privacy-oriented Ethereum roadmap. «Ethereum’s architecture must be designed to ensure that users are private by default, not by exception.»

Caversaccio’s post identified several potential interventions — some new, some old — that could, according to him, would make Ethereum more private for end-users. One idea is to encrypt Ethereum’s public mempool — where transactions are sent before they’re recorded permanently. Another involves making Ethereum transactions confidential through zero-knowledge cryptography, new transaction formats, and other methods.

«Today, Ethereum operates in a partial, opt-in privacy model, where users must take deliberate steps to conceal their financial activities — often at the cost of usability, accessibility, and even effectiveness,» wrote Caversaccio. «This paradigm must shift. Privacy-preserving technologies should be deeply integrated at the protocol level, allowing transactions, smart contracts, and network interactions to be inherently confidential.»

In response to Caversaccio’s post, Ethereum co-founder Vitalik Buterin left a comment on the network’s main developer forum with his own much shorter privacy-oriented Ethereum roadmap.

Buterin suggested focusing on privacy for on-chain payments, anonymizing on-chain activity within applications, making communication on the network anonymous, and privatizing on-chain reads.

To achieve all of this, Buterin listed various steps like integrating certain third-party privacy features into the core network.

One of the more substantial interventions suggested by Buterin involves moving the network towards a “one address per application” model — a departure from today’s system, where a single application may employ dozens of wallets for different features. “This is a major step, and it entails significant convenience sacrifices, but IMO this is a bullet that we should bite, because this is the most practical way to remove public links between all of your activity across different applications,” Buterin wrote.

According to Buterin, if all of his suggestions are implemented, private transactions could be the default on Ethereum.

The privacy discussion comes a few weeks before Ethereum’s next major upgrade, Pectra, which doesn’t have a major focus on privacy. Ethereum developers are also currently planning the network’s following upgrade to Fusaka. The changes to be included in that hard fork are not yet set in stone.

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