tl;dr
The article discusses the reevaluation of a proposed digital asset custody rule by the acting Chair of the United States Securities and Exchange Commission (SEC), Mark Uyeda. The rule, introduced during the Biden administration, aimed to tighten digital asset custody requirements but faced significa...
The acting Chair of the United States Securities and Exchange Commission (SEC), Mark Uyeda, has requested staff to reevaluate and possibly withdraw a Biden-era proposal to tighten digital asset custody requirements. This move aligns with the pro-crypto agenda under the Trump administration. The proposed safeguarding rule faced criticism for its broad scope, and Uyeda highlighted significant challenges in proceeding with the original proposal, leading to the consideration of alternative options, including withdrawal.
The custody rule, if implemented, would extend the standards for maintaining assets with a qualified custodian to digital assets, potentially disqualifying most digital asset exchanges and wallets from offering custody solutions. This proposal had been passed by the SEC commissioners in February 2023, with concerns raised about its potential impact on the number of banks willing to engage with the sector.
Hester Peirce, also known as "Crypto Mom," dissented against the proposed rule, emphasizing its potential difficulty for advisers and clients, particularly smaller advisers. She expressed concerns that an asset-neutral approach to custody could leave investors in crypto assets more vulnerable to theft or fraud.
Furthermore, Uyeda's actions, including revisiting the custody rule and rescinding previous guidelines such as the staff accounting bulletin 121, indicate a shift in the SEC's approach to the digital asset space. This shift reflects a move towards a more industry-friendly stance, departing from the regulation-by-enforcement approach seen under the previous administration.
Uyeda's decision to reconsider the custody rule and other regulatory measures signifies a broader change in course for the SEC under the Trump administration, indicating a move towards a more industry-friendly regulatory environment.