- SEC may revise or scrap strict crypto custody rules under Acting Chair Mark Uyeda.
- Uyeda signals a shift toward balanced crypto regulations, reconsidering restrictive past policies.
The crypto industry has long struggled under the SEC’s regulatory grip, particularly during Gary Gensler’s tenure as chair.
His stringent policies stifled the industry, leaving the sector eager for change.
Following his resignation, the industry took a breath of fresh air, signaling hopes for a more favorable regulatory environment.
Mark Uyeda’s bold stance
Now, under acting chair Mark Uyeda, the SEC may revise or even scrap a controversial rule introduced under the Biden administration, which sought to impose stricter crypto custody standards for investment advisers.
Speaking at an investment industry conference in San Diego on the 17th of March, Uyeda acknowledged the widespread criticism of the proposal, noting that commenters had expressed “significant concern” over its “broad scope.”
Uyeda said,
“Given such concern, there may be significant challenges to proceeding with the original proposal. As such, I have asked the SEC staff to work closely with the crypto task force to consider appropriate alternatives, including its withdrawal.”
He further added,
“Turning to future rulemaking, the Commission should act like a super-sized freighter, not a speedboat – and that means returning to a smoother regulatory course than the rapid changes that have been promulgated over the last four years.”
What happened during Gensler’s tenure?
For those unaware, during Gensler’s tenure, the Biden administration introduced a proposal to tighten custody rules for investment advisers, extending them to cover all client-held assets, including crypto.
The rule required advisers to use a qualified custodian for digital assets, a move Gensler defended by stating that advisers “cannot rely on” crypto platforms due to their operational risks.
However, the proposal faced strong opposition from within the SEC itself.
Commissioner Hester Peirce and acting chair Mark Uyeda, alongside industry advocacy groups, pushed back, arguing that the rule was both unlawful and dangerous for the evolving crypto landscape.
Peirce, the only commissioner to oppose the initial custody rule, had warned that it would “expand the reach of the custody requirements to crypto assets while likely shrinking the ranks of qualified crypto custodians.”
Now, with Uyeda at the helm, the agency appears to be reassessing its restrictive policies.
In fact, Uyeda recently instructed staff to explore “options on abandoning” parts of the controversial proposal that sought to classify certain cryptocurrency protocols as Alternative Trading Systems (ATS).
Therefore, the SEC’s reconsideration of past policies signals a willingness to adapt to the rapidly evolving digital asset landscape.
