Engaging with the current financial climate, we’ve seen a shift in focus towards digital currencies, and the resulting regulatory issues have been at the forefront of many monetary conversations. An essential recent development concerns the United States Securities and Exchange Commission (SEC). Mark Uyeda, the acting chair of the SEC, has suggested that the agency may reconsider its rulemaking blueprint as it pertains to cryptocurrency custody requirements for investment advisers.
# SEC Evaluating the Implications of Crypto Custody Rules
In the 2025 Investment Management Conference held by the Investment Company Institute, Uyeda spoke about the SEC’s new approach and emphasized the need for effective and cost-efficient regulations that operate within the legal allowances. This could result in the agency returning to a simpler framework for its rulemaking process. The much-debated 2023 crypto custody rule proposed under the leadership of Gary Gensler could be a prime candidate for this reconsideration.
Introduced in February 2023, the proposal aimed at amending the 2009 Custody Rule. The amendment meant to broaden and enhance the role of qualified custodians with regards to registered investment advisers who hold assets for investors. Under the 2009 regulation, these advisers are required to hold client assets with a qualified custodian such as a bank or broker-dealer. The 2023 proposed amendment would extend this requirement to almost all assets, including cryptocurrencies, sparking concerns among the industry.
Uyeda pointed out that this approach not only limited access to cryptocurrencies as an asset class but also deviated from the SEC’s traditional neutral stance on investment merits.
## SEC: Future Rulemaking Must Be Methodical and Cautious
Notably, Uyeda criticized the previous administration’s approach to rulemaking and regulatory changes, stating that they did more harm than good. He compared the Commission’s function to that of a massive freighter, insisting it needs to stay consistent with precedent and follow an informed and thorough public process. He concluded by emphasizing the need for careful and methodical actions over rushed decisions.
The acting chair’s comments come amidst the ongoing reassessment of the SEC’s stance on the cryptocurrency industry on the heels of the Trump administration. Several key crypto processes have been paused, closed, or dismissed over the past two months. This includes lawsuits and open investigations against significant industry players like Binance, Coinbase, Kraken, and Robinhood.
Moreover, the SEC is reportedly working to stop “rogue attacks” on the industry by requiring top-level approval for launching investigations and scaling back its crypto enforcement unit. Hester Peirce, a known crypto-friendly SEC Commissioner, revealed that the regulatory agency is expected to start establishing “pieces” of its new framework within the year.
How is the SEC’s stance on cryptocurrencies evolving?
The SEC is currently reevaluating its stance on cryptocurrencies and the related regulatory measures. The shift in focus aims to ensure regulations are more effective, cost-efficient, and operate within legal boundaries. The agency is likely to establish a new framework taking into account the dynamic nature of digital currencies.
What does the 2023 crypto custody rule imply?
The 2023 crypto custody rule implies a proposed amendment to the existing 2009 Custody Rule. If implemented, this rule would extend the requirement for registered investment advisers to hold client assets with a qualified custodian to virtually any asset, including cryptocurrencies. This proposed change has caused significant concerns among industry players.
What are the potential changes the SEC is considering?
Among the potential changes that the SEC may consider is the adoption of a ‘back to basics’ framework for its rulemaking process. It could involve reconsidering, withdrawing, or re-proposing existing rules, like the 2023 crypto custody rule. The agency may also consider extending or delaying compliance dates for some recently adopted rules.
