By Ethan Carter
Acting SEC Chair Mark Uyeda leads the agency in reassessing its proposed cryptocurrency custody rule requirements, which showed a transformation in regulatory attitude. The acting chair continues evaluating essential policies through this recent move, which reflects SEC’s efforts to adapt to the changing crypto ecosystem.
The SEC Evaluates a Proposed Policy That Addresses Crypto Custody Requirements
In February 2023, the Securities and Exchange Commission (SEC) established a new requirement for registered investment advisers to secure client holdings through qualified custodians, including bank or broker-dealer institutions. This proposed extension would apply the current armour, which protects traditional client funds, to the custody of cryptocurrencies.
Strong opposition from stakeholders such as crypto firms, together with traditional financial institutions and congressional Republicans, has made the SEC reevaluate its proposed rule. SEC consultants face challenges in implementing extensive crypto regulations because doing so might restrict crypto companies from conducting business activities with banks.
During his address at the 2025 Investment Management Conference in San Diego, Acting Chair Mark Uyeda mentioned the difficulties that might arise from carrying out the initial proposal due to widespread stakeholder apprehensions. The staff at the SEC continues to work hand in hand with the crypto task force to develop suitable alternatives.
Change in Course Under the Trump Administration
The second time in a short period, Uyeda directed SEC staff members to review a crucial rule. During the recent period the acting chair ordered SEC employees to reevaluate a “exchange” definition proposal because it might extend regulatory control to decentralized crypto endeavors. The changing regulations point to a transformation of federal rules, which the Trump administration now implements.
Before the Biden administration took power under former SEC Chair Gary Gensler, the agency declared that most cryptocurrencies (excluding Bitcoin) functioned as securities. The SEC now follows a moderation strategy in cryptocurrency regulation because Uyeda has adopted a careful consultation-based approach to policymaking.
Potential Impact on the Crypto Industry
The forthcoming custody rule caused immense distress to the crypto industry since its implementation threatened to create additional barriers between crypto and traditional financial institutions. The new rule faced criticism from opposing parties because they claimed it would lead to additional compliance expenses and enterprising hurdles for smaller cryptocurrency businesses. The American Bankers Association and industry groups emphasized that the proposed rule would cause major problems for their business operations.
sezoners endorsed the rule to establish stronger crypto investor protection by implementing the same traditional investment standards.
Looking Ahead
The SEC is currently evaluating its position regarding the custody rule while the industry is closely watching potential new developments. The newly formed crypto task force of the SEC will take a central position in developing future regulations for the crypto industry. The upcoming roundtable discussion about defining “security status” with the task force indicates that the SEC will adjust its crypto policies throughout the next few months.
The SEC’s future regulatory actions regarding cryptocurrency remain uncertain since their proposed rule could face transformative changes or flexible adaptations. Working under Mark Uyeda’s direction, crypto regulation is expected to transition to a new governance standard because the domain is presently undergoing extensive regulatory modification.
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