SEC Signals Potential Revisions to Crypto Custody Rule Under Uyeda’s Leadership
The U.S. Securities and Exchange Commission (SEC) is shifting its approach to cryptocurrency regulations under Acting Chair Mark Uyeda, signaling a possible revision or complete withdrawal of a controversial custody rule proposed during Gary Gensler’s tenure. This move comes as the agency reassesses its stance on digital asset oversight in alignment with the Trump administration’s more industry-friendly approach.
Revisiting Gensler’s Crypto Custody Proposal
Gensler’s 2023 proposal sought to extend federal custody regulations to include crypto assets, requiring investment advisers to store client holdings with qualified custodians such as federally or state-chartered banks. However, Uyeda acknowledged at an investment conference in San Diego that industry feedback highlighted “significant concerns” regarding the rule’s broad application.
“Given such concern, there may be significant challenges to proceeding with the original proposal,” Uyeda stated. He further disclosed that the SEC’s crypto task force is evaluating alternatives, including an outright withdrawal of the rule.
A Shift in the SEC’s Crypto Stance
Uyeda’s leadership marks a departure from the stringent regulatory posture of the previous administration. Following former SEC Chair Gary Gensler’s resignation, the Trump administration has pushed for a more constructive relationship with the crypto industry. This includes rolling back several policies, such as redefining the classification of “exchanges” and halting enforcement measures that targeted crypto firms.
One of the significant rollbacks was the revocation of Staff Accounting Bulletin (SAB) 121, which previously required companies holding crypto assets to report them as liabilities. The decision reflects the administration’s broader effort to create a more business-friendly regulatory environment for digital assets.
The End of Regulation by Enforcement?
Under Trump, the SEC has also abandoned several high-profile lawsuits against major crypto firms, including Binance, Kraken, and Coinbase. These actions signal a major policy shift away from the aggressive legal battles that characterized the previous administration.
Additionally, the SEC has established a dedicated crypto task force led by Commissioner Hester Peirce, often referred to as “Crypto Mom.” The task force is set to host its first industry roundtable, “How We Got Here and How We Get Out – Defining Security Status,” this Friday. The discussion will focus on clarifying regulatory definitions and fostering industry collaboration.
Looking Ahead: The Future of Crypto Regulation in the U.S.
With the SEC under new leadership, the future of U.S. crypto regulation appears to be shifting towards a framework that prioritizes innovation and industry engagement over enforcement-driven oversight. The possible revision of the crypto custody rule is just one of many regulatory changes expected in the coming months.
As the administration continues to adjust its policies, market participants are watching closely to see how these developments will shape the regulatory landscape for digital assets in the U.S.